Lucretia D. HOLLIDAY, Plaintiff-Appellant, v. WELLS FARGO BANK, NA, Defendant-Appellee.
No. 13-2224.
United States Court of Appeals, Sixth Circuit.
June 16, 2014.
366
Before: SUTTON and COOK, Circuit Judges, MARBLEY, District Judge.*
* The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting by designation.
I. INTRODUCTION
Appellant Lucretia Holliday appeals the district court‘s order granting Appellee Wells Fargo‘s motion to dismiss. Holliday also appeals the district court‘s order denying her motion for reconsideration. For the reasons set forth herein, we AFFIRM the district court‘s decisions.
II. BACKGROUND
On September 6, 2006, Plaintiff Lucretia Holliday obtained a mortgage against the real property located at 5269 Pond Bluff Drive, West Bloomfield, Michigan, from People‘s Choice Home Loan, Inc. in the amount of $360,000.00. As security for that loan, Plaintiff granted a mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS“) as nominee for lender in the amount of $360,000. The mortgage was recorded on November 7, 2006. MERS then assigned the mortgage to U.S. Bank Trust National Association, as trustee of the Sequoia Funding Trust. That assignment was recorded on May 27, 2008. The mortgage was finally assigned to Defendant Wells Fargo Bank, NA. The assignment was recorded on December 27, 2011.
Holliday became unable to make the required monthly payments, and the subject mortgage went into default. Wells Fargo initiated foreclosure by advertisement proceedings pursuant to the power of sale contained in the mortgage and
III. ANALYSIS
We review de novo a district court‘s decision to grant or deny a motion to dismiss under Rule 12(b)(6) for failure to state a claim, using the same standards employed by the district court. Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 722 (6th Cir.2010). When considering a motion to dismiss, we must accept as true any well-pleaded factual allegations in the plaintiff‘s complaint, JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir.2007), but we need not accept any legal conclusions or unwarranted factual inferences, Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A complaint‘s factual allegations “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Additionally, we review the lower court‘s ruling on the motion for reconsideration of the motion to dismiss de novo rather than for abuse of discretion. Streater v. Cox, 336 Fed.Appx. 470, 474-75 (6th Cir.2009) (citing Abnet v. Unifab Corp., No. 06-2010, 2009 WL 232998, at *3 (6th Cir. Feb. 3, 2009) (internal citation omitted) (applying de novo standard of review to a motion for reconsideration seeking review of a motion for judgment on the pleadings)).
In Michigan, non-judicial foreclosures, or foreclosures by advertisement, are governed by statute. See
A. Statutory Prerequisites
As a threshold matter, Holliday addresses the issue of whether she has authority, under Michigan law, to bring her claims. Holliday argues that she does; though she recognizes that she failed to act on the Pond Bluff property within the redemption period, Holliday insists that she need not have exercised her right of redemption when there is fraud or irregularities woven throughout the foreclosure process. Holliday alleges that, based on the fraud and irregularities, she has sufficiently established the requirements of the cause of action. Holliday asserts that her lost title to the property is an obvious injury. Holliday also contends that, under Michigan law, “the mortgagor may hold over after foreclosure by advertisement and test the validity of the sale in the summary proceeding.” (Appellant‘s Br., Doc. 25 at 19) (quoting Manufacturers Hanover Mortgage Corp. v. Snell, 142 Mich. App. 548, 553, 370 N.W.2d 401 (1985) (internal citation omitted)). Finally, Holliday notes that the court has the authority to rescind a foreclosure sale if the sale involved fraud or irregularity, and was subsequently invalid.
Wells Fargo claims that, pursuant to Michigan law, Holliday does not have authority to challenge the assignment at issue. Relying on this court‘s decision in Livonia Properties Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, 399 Fed.Appx. 97 (6th Cir.2010), Wells Fargo rebuffs Holliday‘s contention that the assignment of the mortgage was invalid due to the allegedly closed trust of which it was part. Wells Fargo contends that the Livonia Properties court rejected the very challenge to an assignment of a mortgage that Holliday presents here. Wells Fargo further asserts that Holliday‘s argument can be rejected in part for the same reason we rejected plaintiff‘s argument in Conlin v. Mortgage Electronic Registration Systems, Inc., 714 F.3d 355 (6th Cir.2013), where we held that the mortgagor did not show that he had been prejudiced by alleged defects in the assignment of the mortgage. Id. at 361-62. Wells Fargo concludes that, like the appellant in Conlin, Holliday has failed to show prejudice, and thus does not have an actionable claim.
A plaintiff‘s showing of fraud or irregularity alone, however, is insufficient to warrant the rescission of a foreclosure sale. Elsheick v. Select Portfolio Servicing, Inc., 566 Fed.Appx. 492, No. 13-2100, 2014 WL 2139140, at *5 (6th Cir. May 22, 2014). If a plaintiff is able to prove defect or irregularity, it renders the foreclosure sale voidable, not void ab initio. Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98, 825 N.W.2d 329, 337 (2012). For the foreclosure sale to be set aside, then, “[a] plaintiff[] must show that [she was] prejudiced by defendant‘s failure to comply with [
Holliday has failed to meet the stringent standard of showing fraud or irregularity required to grant the necessary extension. As the district court correctly noted, Holliday‘s vague allegations of fraud or irregularities simply do not meet the well-established pleading standards required by Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. Moreover, Holliday does not make any mention of prejudice in this section of her argument, despite the necessity of establishing prejudice in order to have the sheriff‘s sale set aside. As such, the district court correctly dismissed Holliday‘s complaint.
B. Alleged Violation of Mich. Comp. Laws § 600.3205
Holliday challenges Wells Fargo‘s actions regarding the foreclosure proceedings. Holliday claims that Wells Fargo wrongfully proceeded with the foreclosure process despite Holliday‘s alleged attempts to modify her loan. According to Holliday, her complaint clearly states Wells Fargo‘s specific violations of
Wells Fargo counters that Holliday‘s vague allegations of violations are insufficient to demonstrate that Wells Fargo violated the loan modification statute. Though Holliday maintains that she never received notice pursuant to
Under
Pursuant to
The district court correctly dismissed Holliday‘s claim that Defendant failed to comply with
C. Foreclosure by Advertisement and Compliance with Mich. Comp. Laws § 600.3204
Holliday also maintains that the assignment of the mortgage is invalid because it
Wells Fargo responds that, even if Holliday had shown that Wells Fargo had violated the foreclosure by advertisement, she has still not demonstrated a claim for relief. The only relief available through the statute is the conversion of a foreclosure by advertisement to a judicial foreclosure, a remedy that Wells Fargo insists “does not provide a party with an avenue to set aside a completed foreclosure and sheriff‘s sale.” (Appellee‘s Br., Doc. 26 at 12) (citing
In Conlin, this court explained that, pursuant to the holding in Kim, “[
D. Prejudice Against Plaintiff by Foreclosure and Loan Modification
Holliday‘s final argument concerns prejudice and Holliday‘s desire for discovery to bolster her claims. Holliday alleges that she was prejudiced in the foreclosure process but is unable to articulate it because of the lack of discovery at the time Wells Fargo filed its motion to dismiss. She insists that “it is undisputed that Plaintiff was going to challenge the foreclosure/loan modification.” (Appellant‘s Br., Doc. 25 at 21). Relying on Roller v. Federal National Mortgage Association, No. 12-cv-11236, 2012 WL 5828625 (E.D.Mich. June 4, 2012), Holliday argues that any prejudice related to the foreclosure, assignment, and loan modification, can only be “borne out through depositions or requests for other forms of discovery.” (Appellant‘s Br., Doc. 25 at 21).
Wells Fargo responds that, even if Holliday had demonstrated that an irregularity in the foreclosure process by clear and convincing evidence, the sale is simply voidable and Holliday must still show how she was prejudiced by any alleged defect.
We agree with the district court‘s finding that Holliday has not sufficiently shown prejudice. It is well settled that a party cannot “use the discovery process to obtain [the facts it needs to support its claim] after filing suit.” New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d 1046, 1051 (6th Cir.2011). Regarding Holliday‘s reliance on Roller, the district court properly determined that such reliance is misplaced: “the only remedy for a breach of section 600.3205c is conversion of the foreclosure by advertisement to a judicial foreclosure. But the time for that has passed and showing prejudice cannot change that.” Holliday v. Wells Fargo Bank, NA, No. 13-11062, 2013 WL 3880211, at *13 n. 3 (E.D.Mich. July 26, 2013). As the district court determined, Holliday has insufficiently alleged any showing of fraud or defect, in addition to failure to show prejudice suffered as a result of the foreclosure procedure. Thus, we uphold the district court‘s decision to dismiss Holliday‘s claims.
IV. CONCLUSION
For the reasons set forth above, we affirm the district court‘s dismissal of Plaintiff‘s complaint.