Chadwick v. Bank of America, N.A.
1:14-cv-13434
| E.D. Mich. | Mar 13, 2015Background
- Plaintiff John Donald Chadwick Jr. borrowed $169,851 in 2009 and mortgaged 4374 E. Freeland Road; mortgage named MERS as nominee for lender and was later assigned to Bank of America (BANA).
- Plaintiff defaulted; foreclosure by advertisement occurred and BANA purchased the property at sheriff’s sale and received a sheriff’s deed on August 5, 2014.
- Plaintiff filed suit (removed to federal court) asserting a single count of quiet title and alleging defects related to securitization and assignment; he also alleges BANA failed to respond to an accounting request under Mich. Comp. Laws § 440.9210.
- Plaintiff does not deny default, does not allege the foreclosure procedure was improper, and did not attempt to redeem the property during the statutory redemption period.
- Defendant moved to dismiss under Rule 12(b)(6); the magistrate judge recommends granting the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge sheriff’s sale after redemption period | Chadwick contends defects (securitization/assignment) permit quiet title relief despite sale | BANA contends plaintiff lost rights after redemption period and cannot set aside sale absent fraud/irregularity showing | Magistrate: dismissal recommended for lack of standing/failure to meet required showing of fraud or irregularity |
| Requirement to show prejudice from notice or procedural defects | Chadwick implies statutory accounting/notice failures harmed his rights | BANA: any defect is voidable, not void; plaintiff must show prejudice and ability to preserve interest (e.g., funds to redeem) | Magistrate: plaintiff failed to allege prejudice or attempt to redeem; cannot obtain relief |
| Merits of quiet title claim (equitable relief) | Chadwick seeks to quiet title based on alleged chain/assignment/securitization defects | BANA: equitable relief barred where plaintiff has unclean hands (received loan proceeds, defaulted, now seeks to avoid obligations) | Magistrate: quiet title fails on merits; unclean hands and no prima facie showing of title free of liens |
| Pleading sufficiency under Rule 12(b)(6) | Complaint alleges factual theories about securitization and assignment sufficient to state claim | BANA: allegations are conclusory, do not plausibly establish entitlement to relief | Magistrate: complaint lacks plausible factual allegations to state quiet title claim; dismissal recommended |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a claim that is plausible on its face)
- Conley v. Gibson, 355 U.S. 41 (disapproved by Twombly for the no-set-of-facts standard)
- Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356 (Rule 12(b)(6) standards in Sixth Circuit)
- Kim v. JP Morgan Chase Bank, N.A., 493 Mich. 98 (Michigan: foreclosure defects render sale voidable; must show prejudice)
- Jackson Inv. Corp. v. Pittsfield Prod., Inc., 162 Mich. App. 750 (defect in notice renders foreclosure voidable, not void)
- Mitan v. Federal Home Loan Mortgage Corp., 703 F.3d 949 (notice defects render foreclosure voidable)
- Conlin v. MERS, 714 F.3d 355 (mortgagor must meet high standard to set aside foreclosure after redemption period)