303 F. Supp. 3d 554
E.D. Mich.2018Background
- Plaintiff Freddie Garland obtained an $89,000 mortgage in 2004 that was later assigned to U.S. Bank; Wells Fargo serviced the loan.
- Garland was incarcerated 2008–2017; he appointed powers of attorney to manage mortgage matters; he defaulted on the loan after release in 2017.
- Wells Fargo referred the loan to Orlans PC for foreclosure; Orlans sent a March 18, 2017 debt-collection letter stating an amount due and a notice under 15 U.S.C. § 1692 (FDCPA).
- Garland filed state-court suit (removed to federal court) alleging: U.S. Bank and Wells Fargo fraudulently claimed an interest in his property (Count 1), wrongfully initiated foreclosure (Count 2), and that Orlans violated the FDCPA (Count 3); he sought a stay of the non-judicial foreclosure sale.
- Orlans and Wells Fargo moved to dismiss (Rule 12(b)(1) and 12(b)(6)); the court considered standing/Article III, FDCPA notice sufficiency under the "least sophisticated consumer" standard, Michigan foreclosure statute (M.C.L. § 600.3204), and contract/tort preclusion doctrines.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FDCPA claim (Orlans) — standing & notice amount | Orlans demanded an undocumented, inflated amount and thus violated § 1692e/§ 1692g | The letter accurately stated a payoff as of a date and warned amount may change; plaintiff alleges only conclusory overcharge | Denied 12(b)(1) standing challenge; but FDCPA claim dismissed without prejudice under 12(b)(6) for failure to plead facts showing the stated amount was incorrect or that plaintiff sought verification |
| Wrongful foreclosure (Wells Fargo / U.S. Bank) | Foreclosure is improper because defendants do not own or hold the note; contract provisions and extenuating circumstances require investigation or modification | Plaintiff defaulted; statutory prerequisites for foreclosure by advertisement (M.C.L. § 600.3204) were satisfied; U.S. Bank had an interest in the indebtedness | Dismissed with prejudice: foreclosure lawful under Michigan law; plaintiff failed to show lack of ownership/standing to foreclose or a contractual duty preventing foreclosure |
| Fraudulent foreclosure theory | Defendants fraudulently claimed an interest in the property | Plaintiff did not plead facts supporting fraud; documentary record shows execution of note and mortgage | Fraud claim dismissed for failure to plead factual support |
| Miscellaneous statutory/theory claims and tort/negligence theories | Various statutory references, alleged duty to assist with hardship or loan modification | No private right of action under HAMP; tort claims barred where contract governs; plaintiff failed to plead duties separate from contract | Dismissed as incoherent or legally inadequate; negligence and modification claims fail as pleaded |
Key Cases Cited
- Cartwright v. Garner, 751 F.3d 752 (6th Cir. 2014) (distinguishes facial and factual attacks on subject-matter jurisdiction)
- United States v. Ritchie, 15 F.3d 592 (6th Cir. 1994) (on scope of evidence in factual jurisdictional attacks)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Sup. Ct. 1992) (Article III standing requirements)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (application of Twombly plausibility standard)
- Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443 (6th Cir. 2014) (FDCPA is a strict liability statute; statutory damages available without proof of actual damages)
- Kistner v. Law Offices of Michael P. Margelefsky, LLC, 518 F.3d 433 (6th Cir. 2008) (FDCPA strict liability principle)
- Miller v. McCalla, 214 F.3d 872 (7th Cir. 2000) (acceptable form for varying payoff statements under FDCPA)
- Fed. Home Loan Mortg. Corp. v. Lamar, 503 F.3d 504 (6th Cir. 2007) (least-sophisticated-consumer standard for FDCPA notice)
- Residential Funding Co. v. Saurman, 490 Mich. 909 (Mich. 2011) (Michigan interpretation of "interest in the indebtedness" for foreclosure by advertisement)