977 F. Supp. 2d 754
E.D. Mich.2013Background
- In 2005 Polidori took a mortgage loan secured by property in Lincoln Park, MI; servicing transferred to Countrywide and later the mortgage was assigned to Bank of America, N.A. (BANA).
- Polidori stopped mortgage payments after BANA allegedly told him to do so to pursue a loan modification; he submitted paperwork but BANA did not approve a modification.
- BANA initiated foreclosure by advertisement; a sheriff’s sale occurred on December 20, 2012, BANA purchased the property, and the six‑month redemption period expired without redemption.
- Polidori sued in state court two days before redemption period expired, alleging fraudulent misrepresentation, estoppel, negligence, violation of Michigan Occupational Code, and violation of the FDCPA; BANA removed the case and moved to dismiss under Rule 12(b)(6).
- The court applied Michigan foreclosure law (including the six‑month redemption rule and the narrow equitable exception for fraud/irregularity in the foreclosure procedure) and considered public documents attached to the pleadings.
- The court dismissed all counts with prejudice: fraud (insufficient particularity and not tied to foreclosure procedure), promissory estoppel (barred by Michigan statute of frauds), negligence (no independent tort duty), and statutory/FDCPA claims (BANA was creditor/owner, not a regulated collector).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent misrepresentation — rescind sheriff’s sale | BANA represented Polidori was eligible for modification causing him to stop payments and suffer injury | Complaint lacks specificity under Rule 9(b); alleged statements concern loan modification not foreclosure procedure; no showing of prejudice to preserve interest | Dismissed with prejudice for failure to plead fraud with particularity and failure to show prejudice tied to foreclosure procedure |
| Promissory estoppel — enforce oral promise to modify loan | BANA orally promised modification; Polidori relied to his detriment | Michigan statute of frauds bars enforcement of oral promises by financial institutions unless in writing | Dismissed with prejudice as barred by statute of frauds (no signed writing) |
| Negligence — duty to investigate modification eligibility | BANA negligently failed to reasonably inquire into eligibility for modification | No legal duty independent of contractual obligations; no fiduciary duty between mortgagor and mortgagee | Dismissed with prejudice for failure to allege an independent tort duty |
| Statutory claims — Mich. Occupational Code and FDCPA | Debt‑validation letter timed to make defaulted debt "assumed valid" and deceive Polidori | BANA owned the debt (creditor), not a collection agency or FDCPA debt collector | Dismissed with prejudice: Michigan statute excludes creditor from collection‑agency coverage; under FDCPA creditor not a debt collector |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard; plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not assumed true; plausibility standard)
- Senters v. Ottawa Sav. Bank, F.S.B., 443 Mich. 45 (foreclosure by advertisement governed by Michigan law)
- Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98 (prejudice required to set aside foreclosure sale for statutory noncompliance)
- Conlin v. Mortgage Elec. Registration Sys., Inc., 714 F.3d 355 (6th Cir. applying Michigan foreclosure law)
- Glazer v. Chase Home Finance LLC, 704 F.3d 453 (mortgage foreclosure can be debt collection under FDCPA)
- Piotrowski v. State Land Office Bd., 302 Mich. 179 (title vests in purchaser after redemption period)
- Crown Tech. Park v. D & N Bank, F.S.B., 242 Mich. App. 538 (statute of frauds bars actions enforcing oral promises by financial institutions)
- Ulrich v. Federal Land Bank of St. Paul, 192 Mich. App. 194 (no independent duty/fiduciary relationship between lender and borrower)