Gregory v. Citimortgage, Inc.
890 F. Supp. 2d 791
E.D. Mich.2012Background
- Plaintiff mortgagee-holders pursue foreclosure on his Lake Orion home after delinquent payments; sheriff's sale occurred and redemption period followed.
- Plaintiff sues in state court alleging breach of contract, fraud, quiet title, wrongful foreclosure, and conversion; defendants remove to federal court.
- Allegations center on securitization of the note and purported split of note and mortgage, arguing lack of authority to foreclose or collect payments.
- Defendants move to dismiss; court considers attached and public-record documents and treats them as part of pleadings.
- Court grants in part and denies in part; dismissal is entered for all counts except the breach-of-contract claim.
- Key issue is whether Bank of America had statutory authority to foreclose under Michigan law despite securitization and mergers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue | Plaintiff retained ongoing ownership and possession rights after foreclosure. | Plaintiff lacked standing once redemption period expired. | Standing exists; plaintiff pleads continuing ownership and meets Article III and prudential requirements. |
| Authority to foreclose after mergers | Record chain defects and merger transfers void foreclose. | Surviving entity steps into predecessor's shoes; no improper foreclose. | Defendant Bank of America had statutory authority to foreclose; mergers do not defeat authority under Mich. law. |
| Fraud claims viability (counts II-III) | Misrepresentations about note holder and forecloser status; fraud in assignments/notices. | No misrepresentation; foreclosure authority validated; contract governs the relation. | Counts II-III dismissed; fraud claims fail under Rule 9(b) and contractual duty analysis. |
| Quiet title claim viability | Plaintiff seeks to quiet title against conflicting interests due to securitization. | Title disputes not supported; authority to foreclose established. | Count IV (quiet title) dismissed; no fraud or irregularity in foreclosure shown. |
| Breach of contract claim viability (count I) | Assignment of mortgage with note violated by altering possession in trust; damages for split. | Mortgage language allows sale of Note with Security Instrument; no breach shown. | Count I survives; language interpreted to be ambiguous but pleadings state a plausible contract breach. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading plausibility standard; mere formulaic recitations fail)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading a claim)
- Rippy ex rel. Rippy v. Hattaway, 270 F.3d 416 (6th Cir.2001) (standing framework and role in Rule 12(b)(6) analysis)
- Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426 (6th Cir.2008) (assertion of facts must be plausible, not mere legal conclusions)
- Jones v. City of Cincinnati, 521 F.3d 555 (6th Cir.2008) (facial sufficiency; pleading standards)
- Hi-Way Motor Co. v. International Harvester Co., 398 Mich. 330 (Mich. 1976) (Michigan standard for contract interpretation and implied duties)
- Residential Funding Co. v. Saurman, 490 Mich. 909 (Mich. 2011) (foreclosure authority when mortgage holder does not hold note)