Kamel Kassem v. Ocwen Loan Servicing
704 F. App'x 429
| 6th Cir. | 2017Background
- In 2001 the Kassems obtained loans and in 2005 refinanced with a $1.12M mortgage secured by their Bloomfield, MI home; they defaulted after payments rose in 2008.
- The mortgage note and security interest were assigned from AHMA (via MERS) to Countrywide in 2008, and later from Countrywide to Bank of America (BOA) in 2011; assignments were recorded in Oakland County.
- BOA initiated foreclosure-by-advertisement beginning in 2011; Ocwen later serviced the loan and offered a trial modification which the Kassems declined; BOA postponed sale several times and finally scheduled a sale for March 4, 2014.
- The day before the sale the Kassems sued BOA and Ocwen in state court, obtained a TRO, defendants removed to federal court, and the Kassems amended to assert 14 counts under state and federal law.
- The district court dismissed nearly all claims on Rule 12(b)(6)/12(c) grounds, entered judgment against remaining claims, BOA completed foreclosure, and the Kassems appealed; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court should have converted 12(b)(6)/12(c) motions into Rule 56 summary-judgment motions | Kassem: defendants submitted outside documents (assignments) of dubious legitimacy, so conversion and discovery/jury needed | Defs: assignments are public records or referenced in the complaint so §12(d) conversion was unnecessary | Court: No conversion required; plaintiffs forfeited motion and assignments fit exceptions to Rule 12(d) |
| Whether plaintiffs were entitled to convert foreclosure-by-advertisement into judicial foreclosure or a jury trial | Kassem: demanded jury and sought conversion (implicitly) | Defs: plaintiffs never properly pleaded or cited statutory basis for conversion (Mich. Comp. Laws §600.3205c(8)) | Court: Kassems did not plead or move for statutory conversion; claim fails |
| Whether filing suit before sale or BOA’s documentary proof created a right to judicial foreclosure | Kassem: filing prior to sale and disputed ownership documentation required judicial foreclosure | Defs: BOA met statutory proof-of-ownership requirements (record chain of title) | Court: BOA satisfied Mich. Comp. Laws §600.3204(3); filing alone does not force judicial foreclosure |
| Whether Kassems can challenge validity of recorded assignments (standing/merits) | Kassem: assignments were invalid (bankruptcy effect, robo-signing, improper signer) so BOA lacks title | Defs: Kassems lack contractual standing as third parties and show no prejudice (e.g., double liability) from alleged defects | Court: Kassems lack standing to attack assignment merits absent showing of prejudice under §600.3204; no double-liability or other prejudice shown |
Key Cases Cited
- Northville Downs v. Granholm, 622 F.3d 579 (6th Cir.) (standard of review for 12(b)(6)/12(c))
- McLaughlin v. CNX Gas Co., LLC, [citation="639 F. App'x 296"] (6th Cir.) (exceptions to Rule 12(d): documents central to complaint or public records)
- Greenberg v. Life Ins. Co. of Va., 177 F.3d 507 (6th Cir.) (incorporation of documents on motion to dismiss)
- Livonia Properties Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, LLC, [citation="399 F. App'x 97"] (6th Cir.) (interpretation of "record chain of title" under Mich. foreclosure statute)
- Kim v. JPMorgan Chase Bank, N.A., 825 N.W.2d 329 (Mich.) (third parties lack contractual standing to challenge assignments absent prejudice under §600.3204)
- Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355 (6th Cir.) (prejudice requirement for third-party challenges to assignment defects)