861 F. Supp. 2d 818
E.D. Mich.2012Background
- Plaintiffs Ahmad sought to quiet title on their Michigan residence after default, foreclosure, sheriffs sale, and redemption expiration.
- Mortgage named MERS as nominee and later assigned to Wells Fargo; servicing rights transferred to BANA/Home Loans Servicing.
- Plaintiffs allege attempts at HAMP loan modification prior to foreclosure and purported misconsideration of income, including unemployment benefits.
- Foreclosure occurred in 2010; redemption period expired in October 2010; Plaintiffs filed suit in October 2011 challenging the process.
- Plaintiffs assert Counts II–IV (negligence, breach of contract as third-party beneficiary, equitable estoppel) despite conceding no violation of the foreclosure-by-advertisement statute after Saurman decision.
- Court adopts R&R granting Defendants’ Motion to Dismiss, thereby dismissing the action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to quiet title after redemption | Ahmad have continuing ownership rights and injury-in-fact. | Post-redemption, Plaintiffs lack standing to challenge foreclosure in Michigan. | Standing not necessary to decide; but claims fail regardless. |
| Private right of action under HAMP | HAMP guidelines inform breach of duty in modifying review. | No private right of action under HAMP; guidelines do not create duty. | Negligence claim dismissed for lack of independent duty under HAMP. |
| Third-party beneficiary breach of contract | Plaintiffs as homeowners may be intended beneficiaries of SPA. | Borrowers are incidental beneficiaries; no enforceable rights. | Dismissed as no clear intent to benefit Plaintiffs. |
| Equitable estoppel | Oral promise to delay foreclosure estops title transfer. | Oral promise barred by statute of frauds; no valid estoppel. | Equitable estoppel claim dismissed; statute of frauds applicable. |
| Effect of Saurman and standing authority | Saurman changes standing landscape for challenge to sale. | Post-foreclosure procedural defects insufficient for standing beyond merits. | Court declines to resolve standing here; dismisses merits-based claims. |
Key Cases Cited
- Fultz v. Union-Ccommerce Assocs., 470 Mich. 460 (Mich. 2004) (duty in tort actions arising from contract questions separate from contract terms)
- Reid v. Rylander, 270 Mich. 263 (Mich. 1935) (mortgagor may test sale validity in summary proceedings after foreclosure)
- Gage v. Sanborn, 106 Mich. 269 (Mich. 1895) (early limits on mortgagee conduct and foreclosure remedy)
- Manufacturers Hanover Mortgage Corp. v. Snell, 142 Mich.App. 548 (Mich.App. 1985) (mortgagor may challenge foreclosure defects; standing preserved for post-foreclosure actions)
- Brown v. Brown, 478 Mich. 545 (Mich. 2007) (duty arising out of law beyond contract; standard for negligence claims)
- Marques v. Wells Fargo Home Mortgage Inc., 2010 WL 3212131 ((D. Cal. 2010)) (cited but rejected as controlling on third-party beneficiary theory)