Houston v. U.S. Bank Home Mortgage Wisconsin Servicing
505 F. App'x 543
6th Cir.2012Background
- Houston obtained a mortgage to buy a home in 2001; MSHDA owned the loan by 2003 and asserted prepetition arrearage.
- Houston filed Chapter 13 in 2003; Trustee paid MSHDA’s arrearage and directed payments to US Bank when servicing began.
- Bankruptcy plan confirmed in 2004; discharge granted July 2009; Houston made no payments after May 2009.
- Trustee notified Houston in May 2009 that she was current only to secured loans; she did not begin payments post-discharge.
- US Bank’s July 2009 billing stated a current payment and past-due amounts; Houston sent a QWR in August 2009; US Bank admitted failure to respond.
- Foreclosure proceedings were started in 2010 and the property was sold to MSHDA; Houston filed suit in 2010, removal to district court, and the court granted summary judgment for US Bank and MSHDA on all but RESPA damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RESPA causation of foreclosure | Houston argues the RESPA violation caused foreclosure | US Bank contends foreclosure was caused by Houston's nonpayment | No; nonpayment severed causation; remand on damages only |
| Damages tracing to RESPA violation | Damages beyond foreclosure, including emotional distress, trace to RESPA violation | Damages not proven or recoverable under RESPA as charged | Genuine issue of material fact on damages; remand for damages determination |
| Standing to challenge foreclosure (wrongful-foreclosure claim) | Houston has standing to contest foreclosure | Standing foreclosed after redemption period | Houston has standing to raise claim; merits fail for lack of fraud, accident, or mistake |
| Breach-of-contract claim under preexisting-duty rule | § 1715u duties were incorporated into contract; breach possible | Preexisting-duty rule bars enforcement via contract; no consideration for new promise | Preexisting-duty rule bars; no enforceable breach via contract |
Key Cases Cited
- Detroit Trust Co. v. Detroit City Serv. Co., 247 N.W. 76 (Mich. 1933) (redemption rights cannot be enlarged by court beyond statute)
- Gen. Aviation, Inc. v. Capital Region Airport Auth., 569 N.W.2d 883 (Mich. Ct. App. 1997) (preexisting-duty rule applies to statutory duties in contract claims)
- Freeman v. Wozniak, 617 N.W.2d 46 (Mich. Ct. App. 2000) (fraud/irregularity required to undo foreclosure; notice issues evaluated accordingly)
- Mfrs. Hanover Mortg. Corp. v. Snell, 370 N.W.2d 401 (Mich. Ct. App. 1985) (preexisting-duty rule extends to statutory duties in contract claims)
- Burkhardt v. City Nat’l Bank of Detroit, 226 N.W.2d 678 (Mich. Ct. App. 1975) (implied covenant claims require discretionary performance; here none)