Karmol v. Ocwen Loan Servicing, Llc et al

MOTION to dismiss for failure to state a claim

W.D. Mich.March 27, 2017

1 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 UNITED STATES DISTRICT COURT IN THE WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION MICHAEL KARMOL, Plaintiff, vs. OCWEN LOAN SERVICING, LLC, KARESSA ROLLINS, TROTT & TROTT, P.C. AND ALL INTERESTED PARTIES Defendants. Case No. 17-cv-262 Honorable Gordon J. Quist Magistrate Judge Phillip J. Green DEFENDANT OCWEN LOAN SERVICING, LLC’S MOTION TO DISMISS ORAL ARGUMENT REQUESTED Defendant Ocwen Loan Servicing, LLC (“Ocwen”), through its attorneys, Dykema Gossett PLLC, submit the following as their Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). As further discussed in the attached Brief, Ocwen is entitled to dismissal of the Complaint because Plaintiff’s claims are insufficiently pled and otherwise fail as a matter of law. WHEREFORE, Ocwen respectfully requests that this Court (i) dismiss all of Plaintiff’s claims with prejudice; and (ii) grant any other relief this Court deems appropriate. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.135 Page 1 of 24 2 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Date: March 27, 2017 Respectfully submitted, DYKEMA GOSSETT PLLC By: /s/ David M. Dell Thomas M. Schehr (P54391) David M. Dell (P61778) Attorneys for Defendant Ocwen Loan Servicing, LLC 39577 Woodward Ave, Suite 300 Bloomfield Hills, MI 48304 (248) 203-0700 tschehr@dykema.com ddell@dykema.com Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.136 Page 2 of 24 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 UNITED STATES DISTRICT COURT IN THE WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION MICHAEL KARMOL, Plaintiff, vs. OCWEN LOAN SERVICING, LLC, KARESSA ROLLINS, TROTT & TROTT, P.C. AND ALL INTERESTED PARTIES Defendants. Case No. 17-cv-262 Honorable Gordon J. Quist Magistrate Judge Phillip J. Green DEFENDANT OCWEN LOAN SERVICING, LLC’S BRIEF IN SUPPORT OF MOTION TO DISMISS ORAL ARGUMENT REQUESTED Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.137 Page 3 of 24 i D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 STATEMENT OF ISSUES PRESENTED Should the Court dismiss Plaintiff’s Complaint because: (a) Plaintiff’s claims are barred by res judicata; (b) Plaintiff’s claims for fraud, misrepresentation and breach of contract are barred by the statute of frauds; (c) Plaintiff’s claims for fraud, innocent misrepresentation, conversion and tortious interference are insufficiently plead and fail to allege a legal duty separate from contract; (f) Plaintiff fails to plead facts establishing all of the elements of a claim for breach of contract; (g) Plaintiff fails to plead a claim for conversion; (h) Plaintiff’s claim under the Michigan Consumer Protection Act (MCPA) fails because the MCPA does not apply to residential mortgage transactions; (i) Plaintiff has not shown he is entitled to injunctive relief, declaratory relief or a judgment quieting title. (j) Plaintiff’s allegations regarding a “consent decree” or “Dodd Frank” fail to plead a plausible claim for relief. Ocwen answers “yes.” Plaintiff presumably answers “no.” This Court should answer “yes.” Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.138 Page 4 of 24 ii D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 CONTROLLING AND MOST APPROPRIATE AUTHORITY Ocwen relies on Fed. R. Civ. P. 12(b)(6) and the additional authorities cited in their accompanying Brief. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.139 Page 5 of 24 iii D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................................................................... iv INTRODUCTION .......................................................................................................................... 1 SUMMARY OF FACTS ................................................................................................................ 1 I. The Loan ................................................................................................................. 1 II. Plaintiff’s First Lawsuit .......................................................................................... 2 III. Plaintiff’s Bankruptcy Case .................................................................................... 3 IV. Plaintiff’s Second Lawsuit...................................................................................... 3 V. Current Lawsuit ...................................................................................................... 4 STANDARD OF REVIEW ............................................................................................................ 5 ARGUMENT.................................................................................................................................. 6 I. Plaintiff’s Complaint is Barred by Res Judicata and Collateral Estoppel. ............. 6 II. Plaintiff’s Claims of Fraud, Innocent Misrepresentation and Breach of Contract are Barred by Statute of Frauds................................................................ 7 III. Plaintiff’s Fraud, Innocent Misrepresentation, Conversion and Tortious Interference Claims Are Barred By The Economic Loss Doctrine. ....................... 9 IV. Plaintiff Fails To Allege Facts Establishing The Elements Of A Breach Of Contract................................................................................................................... 9 V. Plaintiff’s Claim For Conversion Fails. ................................................................ 10 VI. Plaintiff Fails to Plead a Claim For Tortious Interference of a Business Relationship or Expectancy. ................................................................................. 11 VII. The Michigan Consumer Protection Act Does Not Apply To Residential Loan Transactions. .............................................................................................. 12 VIII. Plaintiff Has Failed To Plead A Cause Of Action For Injunctive Relief, Declaratory Relief Or Quiet Title. ........................................................................ 13 IX. Plaintiff’s Allegations Regarding Violation Of A Consent Decree Or Dodd Frank Are Without Merit. ..................................................................................... 14 Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.140 Page 6 of 24 iv D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 TABLE OF AUTHORITIES Page(s) CASES Ashcroft v. Iqbal, 556 U.S. 662; 129 S. Ct. 1937 (2009)..................................................................................5, 11 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).............................................................................................................5, 11 Berry v. Bank of America, N.A., 2009 U.S. Dist. LEXIS 117584, 2009 WL 4950463 (E.D. Mich. Dec.16, 2009) ........................................................................................................................................12 Beulah Hoagland Appleton Qualified Pers. Residence Trust v. Emmet Co. Road Comm’n., 236 Mich. App. 546; 600 N.W.2d 698 (1999).........................................................................13 Bingham v. Bank of America, NA, Case No. 10-11917, 2010 WL 3633925 (E.D. Mich. Sept. 14, 2010).......................................8 Blackburn v. Fisk Univ., 443 F.2d 121 (6th Cir. 1971) .....................................................................................................6 Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975).................................................................................................................14 Brennan v. Edward D. Jones & Co., 245 Mich. App. 156; 626 N.W.2d 917 (2001).........................................................................10 Citizens Ins. Co. of America v. Delcamp Truck Center, Inc., 178 Mich. App. 570; 444 N.W.2d 210 (1989).........................................................................10 Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327 (6th Cir. 2007) .....................................................................................................2 Cromer v. Safeco Ins. Co. of Am., No. 2:09-CV-13716, 2010 U.S. Dist. LEXIS 36630 (E.D. Mich. Apr. 14, 2010) ..........................................................................................................................................9 Crown Technology Park v. D&N Bank, FSB, 242 Mich. App. 538; 619 N.W.2d 66 (2000).............................................................................8 Dzierwa v. Michigan Oil Co, 152 Mich. App. 281; 393 N.W. 2d 610 (1986)........................................................................12 Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.141 Page 7 of 24 v D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Eaton Co. Bd. of Co. Rd Comm’rs v. Schultz, 205 Mich. App. 371; 521 N.W.2d 847 (1994)...........................................................................6 Foremost Ins. Co. v. Allstate Ins. Co., 439 Mich. 378 (1992) ..............................................................................................................10 Formall, Inc v. Community Nat’l Bank of Pontiac, 166 Mich. App. 772; 421 N.W.2d 289 (1988).........................................................................11 Foundation For Interior Design Educ. Res. v. Savannah College of Art & Design, 244 F.3d 521 (6th Cir. 2001) .....................................................................................................5 G.M. Eng’rs and Assoc., Inc. v. West Bloomfield Township, 922 F.2d 328 (6th Cir. 1990) .....................................................................................................5 Greenberg v. Life Ins. Co. of Va., 177 F.3d 507 (6th Cir. 1999) .....................................................................................................2 Hackley v. Hackley, 426 Mich. 582; 395 N.W.2d 906 (1986)....................................................................................6 Health Call of Detroit v Atrium Home & Health Care Services, Inc, 268 Mich. App. 83; 206 N.W.2d 843 (2005) ; 206 N.W.2d 843 (2005) .................................11 Jackson v. City of Columbus, 194 F.3d 737 (6th Cir. 1999) .....................................................................................................2 Life Care Centers of America, Inc. v. Charles Town Assocs. Ltd. Partnership, LPIMC, Inc., 79 F.3d 496 (6th Cir. 1996) .......................................................................................................9 McKay v. Palmer, 170 Mich. App. 288; 427 N.W.2d 620 (1988).........................................................................13 Morgan v. Church’s Fried Chicken, 829 F.2d 10 (6th Cir. 1987) ...................................................................................................5, 6 Newton v. Bank West, 262 Mich. App. 434, 686 N.W.2d 491 (2004).........................................................................12 Parks v. LaFace Records, 329 F.3d 437 (6th Cir. 2003) ...................................................................................................12 People v. Trakhtenberg, 493 Mich. 38; 826 N.W.2d 136 (2012)......................................................................................7 QQC, Inc. v. Hewlett-Packard Co., 258 F. Supp. 2d 718 (E.D. Mich. 2003).....................................................................................2 Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.142 Page 8 of 24 vi D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Rehbein v. CitiMortgage, Inc., 937 F. Supp. 2d 753 (E.D. Va. 2013) ......................................................................................14 Richards v. Tibaldi, 272 Mich. App. 522; 726 N.W.2d 770 (2006).........................................................................13 Siecinski v. First State Bank of East Detroit, 209 Mich. App. 459; 531 N.W.2d 768 (1995); 531 N.W.2d 768 (1995) ..................................9 Spengler v. ADT Sec. Servs., Inc., 505 F.3d 456 (6th Cir. 2007) .....................................................................................................9 Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499 (2007).........................................................................................2 Weiner v. Klais & Co., Inc., 108 F.3d 86 (6th Cir. 1997) .......................................................................................................2 Wummel v First National Bank of America, No 247023, 2004 Mich. App. LEXIS 1011 (Mich. App., April 20, 2004), Unpublished Opinions ...........................................................................................................1, 8 Yuille v. AHMSI, et al., 483 Fed. Appx. 132 (6th Cir. 2012).........................................................................................13 RULES Fed. R. Civ. P. 12(b)(6)............................................................................................................2, 4, 5 Fed. R. Civ. P. 56.............................................................................................................................2 STATUTES 15 U.S.C. § 1692..............................................................................................................................3 18 U.S.C. § 96, et seq.......................................................................................................................3 M.C.L. 566.132(2) .......................................................................................................................7, 8 MCL 445.901, et seq..................................................................................................................3, 12 Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.143 Page 9 of 24 1 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 INTRODUCTION This lawsuit is Plaintiff’s latest attempt to prevent the foreclosure of his Property. Plaintiff has now filed three lawsuits and two motions in bankruptcy court attempting to discharge the Mortgage. His previous efforts have failed due to the lack of validity of his claims. Undeterred, Plaintiff has filed yet another frivolous lawsuit. Here, Plaintiff’s claims fail for the following reasons: First, Plaintiff’s claims are barred by res judicata and collateral estoppel; Second, Plaintiff’s claims for fraud, breach of contract and misrepresentation are barred by the statute of frauds; Third, Plaintiff’s claims for fraud, innocent misrepresentation, conversion and tortious interference claim are insufficiently plead and fail to allege a legal duty separate from contract; Fourth, Plaintiff fails to plead facts establishing all of the elements of a claim for breach of contract; Fifth, Plaintiff fails to plead facts alleging a claim for conversion; Sixth, Plaintiff fails to plead a claim for tortious interference with a business relationship or expectancy; Seventh, Plaintiff’s claim under the Michigan Consumer Protection Act (MCPA) fails because the MCPA does not apply to residential mortgage transactions; Eighth, Plaintiff has not shown he is entitled to injunctive relief, declaratory relief or a judgment quieting title. Finally, Plaintiff’s vague allegations under a “consent decree” or “Dodd Frank” fail to state a claim for relief. SUMMARY OF FACTS I. The Loan The real property at issue in this matter is located at 4531 Don Street, Holt, Michigan (the “Property”). (Compl. ¶ 12). On or about April 22, 2004, Michael J. Karmol (“Plaintiff”) Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.144 Page 10 of 24 2 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 obtained a $116,471.00 loan (“Loan”) and granted Mortgage Electronic Registration Systems, Inc (“MERS”) a mortgage interest (“Mortgage”) on real property commonly known as 4531 Don Street, Holt, Michigan (the “Property”). The Mortgage was recorded on May 20, 2004, in liber 3109, page 491, Ingham County Records. See Ex. 1, Mortgage.1 On December 24, 2015, MERS assigned the Mortgage to Ocwen via Assignment of Mortgage (“Assignment”). The Assignment was recorded on January 15, 2016 in instrument number 2016-001754, Ingham County Records. See Ex. 2, Assignment of Mortgage. Ocwen is also the current servicer of the Loan. II. Plaintiff’s First Lawsuit On January 11, 2016, Plaintiff filed a lawsuit against GMAC seeking quiet title and damages against GMAC. (Michael Karmol v. GMAC Mortgage Corp, Ingham County Circuit Court, Case No. 16-16-CH.) Plaintiff was asking the state court for an order discharging the unpaid mortgage. The case was dismissed without prejudice after Plaintiff re-opened his bankruptcy case. 1 In ruling on a motion to dismiss under Rule 12(b)(6), the Court may consider the complaint as well as (i) documents referenced in the pleadings and central to plaintiff’s claims, (ii) matters of which a court may properly take notice, (iii) public documents, and (iv) letter decisions of government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2509 (2007); Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999); see also Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir. 1999)). Specifically in cases such as this, “if the plaintiff fails to attach the written instrument upon which he relies, the defendant may introduce the pertinent exhibit,” which is then considered part of the pleadings. QQC, Inc. v. Hewlett-Packard Co., 258 F. Supp. 2d 718, 721 (E.D. Mich. 2003) (citing Weiner v. Klais & Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997)). “Otherwise, a plaintiff with a legally deficient claim could survive a motion to dismiss simply by failing to attach a dispositive document.” Weiner, supra. The Court also is entitled to consider matters of public record without converting the motion to one for summary judgment. Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). Therefore, the Court can consider the Note, Mortgage, Assignment of Mortgage, and Adjournments without converting this motion to a motion under Rule 56. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.145 Page 11 of 24 3 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 III. Plaintiff’s Bankruptcy Case On or about November 8, 2011, the Debtor filed a Chapter 7 Bankruptcy Petition in the U.S. Bankruptcy Court for the Western District of Michigan (“Bankruptcy Court”). On February 9, 2012, the Debtor was granted a discharge (“Discharge”). Ex. 3, Discharge. On April 15, 2016, the Debtor filed a Motion for Sanctions in Bankruptcy Court alleging that his Mortgage was discharged in the Chapter 7 case and Ocwen’s efforts to foreclose the defaulted mortgage were a violation of the Court’s Discharge. (See Case No. 11-11241-jtg, Dkt. No. 24.) On May 2, 2016, the Bankruptcy Court denied the motion and held that the Mortgage lien was not discharged in Debtor’s Bankruptcy and Ocwen’s efforts to foreclose the lien are not a violation of the Debtor’s Discharge. Ex. 4, Order. On May 24, 2016, Debtor filed a Motion to Void the Lien and seek sanctions for alleged fraudulent transfers associated with the Assignment of the Mortgage. (See Case No. 11-11241-jtg, Dkt. 41.) The Motion to Avoid the Lien was also denied by the Bankruptcy Court. IV. Plaintiff’s Second Lawsuit On September 26, 2016, Plaintiff filed a Complaint alleging that Ocwen illegally charged late fees, misapplied his payments, mishandled his escrow account and charged fees for other default related services. The Complaint fails to allege any specific facts related to Plaintiff’s Loan and recites various statutes and case law. The Complaint included counts for the following: violation of the “Michigan Unfair Competition Law” or the Michigan Consumer Protection Act; violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 96, et seq.; violation of the Fair Debt Collections Practices Act, 15 U.S.C. § 1692e (“FDCPA”); Unjust Enrichment; Fraud; and Breach of Contract. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.146 Page 12 of 24 4 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 On December 11, 2016, the Court granted Ocwen’s motion to dismiss under Fed. R. Civ. P. 12(b)(6). This Court determined that Plaintiff had failed to state a plausible claim for relief and also concluded that Plaintiff “used a form complaint that he obtained from some source, possibly the internet.” Ex. 5, Opinion and Order. V. Current Lawsuit On or about February 22, 2017, Plaintiff filed the current lawsuit in Ingham County Circuit Court naming Ocwen, Karessa Rollins2 and Trott Law, PC. Plaintiff’s complaint is very similar to the form complaint filed in the previous case before this Court although it does contain some different allegations and causes of action. Factually, Plaintiff alleges that Ocwen has engaged in dual tracking by proceeding with foreclosure while he has applied for a loan modification. Dkt. 1, Ex. A, Compl. ¶11-15. Plaintiff alleges this is in violation of a “consent decree and the Dodd Frank Act.” Id. at ¶16. Plaintiff also appears to allege that Ocwen is misapplying payments under the Mortgage or improperly imposing escrow. Id. at ¶18-27. Plaintiff also alleges that “Defendant, by use of MERS and a chain of loan servicers, have concealed from the Plaintiff the name, address and identity of the Lender, and that Plaintiff is informed, believes, and was told by Ocwen that they are NOT the holder NOR owner of the mortgage.” Id. at ¶30. Throughout the Complaint, Plaintiff also alleges that the note was separated from the Mortgage and Ocwen has no right to foreclose the Mortgage. The Complaint contains claims for the following: common-law fraud; innocent misrepresentation; breach of contract; conversion; tortious interference with a business relationship or expectancy; unfair trade practices (Michigan Consumer Protection Act); and injunctive relief, declaratory relief and quiet title. 2 Ms. Rollins is an Ocwen employee who has not yet been served. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.147 Page 13 of 24 5 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 STANDARD OF REVIEW This Motion is brought pursuant to Fed. R. Civ. P. 12(b)(6), which authorizes this Court to dismiss a complaint if it “fail[s] to state a claim upon which relief can be granted[.]” In reviewing a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), the Court must “accept all of plaintiff’s factual allegations as true and determine whether any set of facts consistent with the allegations would entitle the plaintiff to relief.” G.M. Eng’rs and Assoc., Inc. v. West Bloomfield Township, 922 F.2d 328, 330 (6th Cir. 1990). “[A] plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do . . . .” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations and modifications omitted). It is well established that a claimant must “allege a factual predicate concrete enough to warrant further proceedings . . . .” Foundation For Interior Design Educ. Res. v. Savannah College of Art & Design, 244 F.3d 521, 530 (6th Cir. 2001). A properly pleaded complaint requires “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662; 129 S. Ct. 1937, 1949 (2009). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotations omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotations and citations omitted). Therefore, a plaintiff must do more than allege bare conclusions of law, and the court “need not accept as true legal conclusions or unwarranted factual inferences.” Morgan v. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.148 Page 14 of 24 6 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). Moreover, a court is “not bound by allegations that are clearly unsupported and unsupportable[.] [A court] should not accept as true allegations that are in conflict with facts judicially known to the Court . . . .” Blackburn v. Fisk Univ., 443 F.2d 121, 123 (6th Cir. 1971). ARGUMENT I. Plaintiff’s Complaint is Barred by Res Judicata and Collateral Estoppel. The factual allegations in Plaintiff’s Complaint are confusing but at least some of his claims involve allegations that Ocwen misapplied payment or mishandled his escrow account. Id. at ¶18-27. Plaintiff also challenges Ocwen’s right to foreclose the mortgage despite being the record mortgagee. Id at 30. In support of his fraud claim, Plaintiff alleges that Ocwen mailed invoices “bearing fraudulent fees, late charges.” Compl. at ¶44. In the claim for innocent misrepresentation, Plaintiff alleges he suffered damage by incurring and paying additional fees, or late charges. Id. at ¶58. These allegations were previously raised by Plaintiff, or could have been raised, in the prior lawsuit. Therefore, Plaintiff is barred by the doctrines of res judicata and collateral estoppel from re-litigating these issues. The doctrine of res judicata applies when (1) the former suit must have been decided on the merits, (2) the issues in the second action were or could have been resolved in the former one, and (3) both actions must involve the same parties or their privies. Eaton Co. Bd. of Co. Rd Comm’rs v. Schultz, 205 Mich. App. 371, 375; 521 N.W.2d 847 (1994). Michigan follows a “broad rule” of res judicata which bars not only claims actually litigated in the prior action, but every claim arising out of the same transaction which the parties could have raised but failed to do. Hackley v. Hackley, 426 Mich. 582, 585; 395 N.W.2d 906 (1986). Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.149 Page 15 of 24 7 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 All the elements of res judicata are satisfied here. First, the first lawsuit was decided on the merits via this Court’s Opinion and Order on the motion to dismiss. Second, Plaintiff is raising issues that were (payment application) or could have been (Ocwen’s right to foreclose) raised in the first lawsuit. Finally, the parties are the same in both cases, so the third element is met. As such, Plaintiff’s claims are barred by res judicata. For these same reasons, Plaintiff’s claims are also barred by collateral estoppel. Pursuant to Michigan law, collateral estoppel precludes the re-litigation of an issue in a subsequent proceeding between the same parties where (1) a question of fact essential to the judgment was actually litigated and determined by a valid and final judgment, (2) the same parties had a full and fair opportunity to litigate the issue, and (3) there was mutuality of estoppel. People v. Trakhtenberg, 493 Mich. 38, 48; 826 N.W.2d 136, 141 (2012). While the facts alleged in the Complaint are confusing and vague, it appears Plaintiff is simply attempting to get a second bite at the apple by continuing to prevent the foreclosure of his Property. The entire Complaint should be dismissed on res judicata and collateral estoppel grounds. To extent that the claims are not barred by res judicata/collateral estoppel, the Complaint should still be dismissed for the below reasons. II. Plaintiff’s Claims of Fraud, Innocent Misrepresentation and Breach of Contract are Barred by Statute of Frauds. Plaintiffs’ claims Ocwen, or its employee, made false promises or representations to modify the terms of the loan to Plaintiff, review Plaintiff for a loan modification or to forebear from foreclosing on his Property. See Compl. ¶50, 55 and 74. Such claims, while untrue, are non-starters under Michigan law. M.C.L. 566.132(2) prohibits any action against a financial institution, such as Chase, to enforce a promise or commitment to modify a loan agreement or to Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.150 Page 16 of 24 8 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 provide other financial accommodations unless the promise or commitment is in writing and signed with an authorized signature by the financial institution. See Crown Technology Park v. D&N Bank, FSB, 242 Mich. App. 538, 549; 619 N.W.2d 66 (2000) (discussing M.C.L. 566.132(2) in detail, and holding that any agreements to modify a loan, waive a loan provision, or to provide any other financial accommodation, must be in writing and signed by the financial institution); Wummel v First National Bank of America, No 247023, 2004 Mich. App. LEXIS 1011 (Mich. App., April 20, 2004)3 (unpublished) (affirming a circuit court decision to grant summary disposition on claims of breach of fiduciary duty, breach of contract, misrepresentation, fraud, specific performance, and promissory estoppel where the plaintiff brought an action against a financial institution to enforce an oral agreement to loan money) (emphasis added); See also Bingham v. Bank of America, NA, Case No. 10-11917, 2010 WL 3633925, (E.D. Mich. Sept. 14, 2010) (dismissing plaintiff’s claims including breach of implied agreement, innocent/negligent misrepresentation, intentional misrepresentation, and fraud based upon silent fraud and bad faith promises). In the above cases, the courts noted that MCL 566.132(2) precluded a party from bringing a claim - no matter what the label - against a financial institution to enforce an oral promise to waive a loan provision. Crown Tech Park, supra, at 550, 552; Wummel, supra, at *3. Here, Plaintiffs seek damages from Ocwen for alleged promises or representations from Ocwen, or its agents or employees, that conflict with the express terms of the Loan and Mortgage documents. Any alleged promises to modify the loan, review Plaintiff for a loan modification or forbear from foreclosing are all oral promises which are barred by MCL 566.132(2). Therefore, 3 Unpublished Opinions are attached as Exhibit 6. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.151 Page 17 of 24 9 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Plaintiff cannot maintain his claims for fraud, innocent misrepresentation or breach of contract against Ocwen and those claims must be dismissed. III. Plaintiff’s Fraud, Innocent Misrepresentation, Conversion and Tortious Interference Claims Are Barred By The Economic Loss Doctrine. Plaintiff alleges tort claims against Ocwen for fraud, innocent misrepresentation, conversion and tortious interference. These claims should be dismissed under the economic loss doctrine. It is well-established that “in a contractual setting, a tort action must rest on a breach of duty distinct from the contract . . . .” Siecinski v. First State Bank of East Detroit, 209 Mich. App. 459, 465; 531 N.W.2d 768 (1995); 531 N.W.2d 768 (1995); see also Spengler v. ADT Sec. Servs., Inc., 505 F.3d 456, 458 (6th Cir. 2007); Cromer v. Safeco Ins. Co. of Am., No. 2:09-CV- 13716, 2010 U.S. Dist. LEXIS 36630, at *5 (E.D. Mich. Apr. 14, 2010). Here, Plaintiffs’ tort claims do not rest upon a breach of duty separate and distinct from the Mortgage. Rather, Plaintiffs’ claim falls squarely within the four corners of that document. Plaintiff’s Complaint boils down to allegations that Ocwen failed to either modify his loan or forbear from foreclosure while he applied for a loan modification. See Compl., generally. Accordingly, because there is no relationship between Plaintiff and Ocwen independent of the Mortgage, Plaintiff’s tort claims are barred by the economic loss doctrine. The claims for fraud, innocent misrepresentation, conversion and tortious interference should be dismissed. IV. Plaintiff Fails To Allege Facts Establishing The Elements Of A Breach Of Contract. Plaintiff fails to allege a claim for breach of contract. To state a claim for breach of contract, Plaintiffs must show: (1) the existence of an enforceable contract, (2) nonperformance amounting to a breach of the contract, and (3) damages caused by the breach of the contract. Life Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.152 Page 18 of 24 10 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Care Centers of America, Inc. v. Charles Town Assocs. Ltd. Partnership, LPIMC, Inc., 79 F.3d 496, 514 (6th Cir. 1996). Here, Plaintiff alleges “Defendant breached the agreement not to sell the Plaintiff’s home where Ocwen and Karessa Rollins promised that if Plaintiff participated in loss mitigation, the Defendant would not hold an auction of Plaintiffs property.” Compl. ¶ 74. Plaintiff does not identify the contractual provisions in the Mortgage that he claims Ocwen has breached. He also fails to identify any other contracts which require Ocwen to either participate in loss mitigation or refrain from selling his home. Consequently, the breach of contract claim is insufficiently plead and should be dismissed. V. Plaintiff’s Claim For Conversion Fails. Plaintiff’s claim for conversion should be dismissed for failure to state a claim because he has not alleged facts establishing all essential elements of a claim for conversion. The tort of conversion consists of a distinct act of dominion wrongfully exerted over another person’s personal property inconsistent with the ownership rights of the other. See Foremost Ins. Co. v. Allstate Ins. Co., 439 Mich. 378, 391 (1992). Conversion occurs at the point that wrongful dominion over personal property is asserted. Brennan v. Edward D. Jones & Co., 245 Mich. App. 156; 626 N.W.2d 917, 919 (2001). An action for conversion of money can be maintained if “there is an obligation on the part of the defendant to return the specific money entrusted to his care . . . [that was obtained] without the owner’s consent to the creation of a debtor and creditor relationship.” Citizens Ins. Co. of America v. Delcamp Truck Center, Inc., 178 Mich. App. 570, 575; 444 N.W.2d 210 (1989). Here, Plaintiff alleges that Defendants are “stealing and/or embezzling Plaintiff’s property in the form of money from Plaintiff, by billing and holding itself out as the Lender Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.153 Page 19 of 24 11 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 when the true identity of the Lender was known only to MERS and the Defendant and collecting money for an entity (Ocwen) who has no interest in the subject note and mortgage.” Compl., at ¶ 80. Plaintiff fails to identify what, if any, payments he made that Ocwen converted for its own use. The vague facts alleged do not provide a basis for a conversion claim and it should be dismissed for failure to state a plausible claim under Twombly, 550 U.S. at 555; Iqbal, 129 S.Ct. at 1949. VI. Plaintiff Fails to Plead a Claim For Tortious Interference of a Business Relationship or Expectancy. Plaintiff fails to plead claims for tortious interference with a business relationship or expectancy. In order to state a claim of tortious interference with a business relationship / expectancy, a Plaintiff must allege: (1) the existence of a valid business relationship or expectancy that is not necessarily predicated on an enforceable contract, (2) knowledge of the relationship or expectancy on the part of the defendant interferer, (3) an intentional interference by the defendant inducing or causing a breach or termination of the relationship or expectancy, and (4) resulting damage to the party whose relationship or expectancy was disrupted. Health Call of Detroit v Atrium Home & Health Care Services, Inc, 268 Mich. App. 83, 90; 206 N.W.2d 843 (2005) (citations omitted); 206 N.W.2d 843 (2005) (citations omitted). “One who alleges tortious interference with a contractual or business relationship must allege the intentional doing of a per se wrongful act or the doing of a lawful act with malice and unjustified in law for the purpose of invading the contractual rights or business relationship of another.” Formall, Inc v. Community Nat’l Bank of Pontiac, 166 Mich. App. 772, 779; 421 N.W.2d 289 (1988). Plaintiff must plead facts, which if true, would establish that the Defendants’ act of interference directly caused the breach of contract or breakdown of the business Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.154 Page 20 of 24 12 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 relationship. See, Parks v. LaFace Records, 329 F.3d 437, 462 (6th Cir. 2003) (plaintiff must plead facts establishing that the wrongful act “hastened a breach of contract or another breakdown of a business relationship.”); Dzierwa v. Michigan Oil Co, 152 Mich. App. 281, 287; 393 N.W. 2d 610 (1986) (“To maintain a cause of action for tortious interference with contract, a plaintiff must establish a breach of contract caused by the defendant.”) Here, Plaintiff’s tortious interference claims fail as a matter of law because, first, Plaintiff fails to plead a single fact, which if true, would establish that Ocwen committed an act of intentional and improper interference that caused the breakdown of a business relationship. In fact, Plaintiff has not pleaded that any specific business relationship was harmed due to Ocwen’s actions. Plaintiff’s claims clearly relate to his personal residential mortgage and he fails to allege the basic elements to establish a tortious interference claim. This count should be dismissed as well. VII. The Michigan Consumer Protection Act Does Not Apply To Residential Loan Transactions. Plaintiff alleges that Ocwen, a licensed mortgage servicer, violated the Michigan Consumer Protection Act (“MCPA”), M.C.L. 445.901, et. seq. by engaging in unfair trade practices. As this Court previously held, this claim fails because the MCPA does not apply to residential loan transactions. See Newton v. Bank West, 262 Mich. App. 434, 438-39, 686 N.W.2d 491 (2004) (holding that the plaintiff's “MCPA claim fails as a matter of law because the residential mortgage loan transactions are exempt”); Berry v. Bank of America, N.A., 2009 U.S. Dist. LEXIS 117584, 2009 WL 4950463 (E.D. Mich. Dec.16, 2009) (“the MCPA does not apply to residential loan transactions”). There is no question that Plaintiff is alleging violations of the MCPA in connection to the servicing of his residential mortgage. See, Compl. ¶ 92. Since Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.155 Page 21 of 24 13 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 residential mortgage loan transactions are exempt from the MCPA, this Count must be dismissed with prejudice. VIII. Plaintiff Has Failed To Plead A Cause Of Action For Injunctive Relief, Declaratory Relief Or Quiet Title. Plaintiff is simply not entitled to declaratory/injunctive relief or an order quieting title. In an action to quiet title to land, “plaintiff has the burden of proof and must make out a prima facie case of title. Once the plaintiff makes out a prima facie case, the defendant[] then ha[s] the burden of proving superior right or title in themselves.” Beulah Hoagland Appleton Qualified Pers. Residence Trust v. Emmet Co. Road Comm’n., 236 Mich. App. 546, 550; 600 N.W.2d 698 (1999). If title was quieted in Plaintiff’s name and the Mortgage discharged, Plaintiff would achieve a windfall. He would keep the benefit of the Mortgage, and the Property he put up as collateral, without having repaid the Mortgage loan. Having failed to abide by his contractual promises, Plaintiffs should not be allowed to use equity to achieve an inequitable result. See Richards v. Tibaldi, 272 Mich. App. 522, 539; 726 N.W.2d 770 (2006) (the doctrine of unclean hands “closes the doors of equity to one tainted with inequitableness or bad faith relative to the matter in which he or she seeks relief, regardless of the improper behavior of the defendant”); McKay v. Palmer, 170 Mich. App. 288, 293; 427 N.W.2d 620 (1988) (barring plaintiff’s quiet title suit on the doctrine of unclean hands). Indeed, the Sixth Circuit has held that a mortgagor who receives the proceeds of a loan and fails to pay it back cannot seek “judicial assistance in avoiding his contractual obligations.” Yuille v. AHMSI, et al., 483 Fed. Appx. 132 (6th Cir. 2012) (applying the doctrine of unclean hands to bar a defaulted mortgagor’s quiet title claim). Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.156 Page 22 of 24 14 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Accordingly, Plaintiff’s is not entitled to equitable relief and his claim for declaratory relief, injunctive relief or quiet title should be dismissed. IX. Plaintiff’s Allegations Regarding Violation Of A Consent Decree Or Dodd Frank Are Without Merit. Throughout the Complaint, Plaintiff references violations of “Dodd Frank and the Consent Decree” without explaining the references or citing a specific statute. To the extent Plaintiff is attempting to seek relief under the Consent Judgment entered into by Ocwen with the Consumer Financial Protection Bureau under the National Mortgage Settlement, those claims are misplaced. The issue of borrowers attempting to bring claims under such consent judgments has been addressed repeatedly by courts, who conclude that borrowers cannot bring such claims. See, e.g., Rehbein v. CitiMortgage, Inc., 937 F. Supp. 2d 753, 760-762 (E.D. Va. 2013) (borrower cannot bring claims under a mortgage-related consent judgment entered into with state and federal governments); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750 (1975) (non-party beneficiaries of a consent decree is not enforceable by those non-parties). Therefore, any claims under the Consent Judgment or Dodd-Frank should be dismissed with prejudice. WHEREFORE, Ocwen respectfully requests that this Court (i) dismiss all of Plaintiff’s claims with prejudice; and (ii) grant any other relief this Court deems appropriate. Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.157 Page 23 of 24 15 D Y K E M A G O S S E T T •A P R O F E S S IO N A L L IM IT E D L IA B IL IT Y C O M P A N Y •4 0 0 R E N A IS S A N C E C E N T E R •D E T R O IT , M IC H IG A N 4 82 4 3 Date: March 27, 2017 Respectfully submitted, DYKEMA GOSSETT PLLC By: /s/ David M. Dell Thomas M. Schehr (P54391) David M. Dell (P61778) Attorneys for Defendant Ocwen Loan Servicing, LLC 39577 Woodward Ave, Suite 300 Bloomfield Hills, MI 48304 (248) 203-0700 tschehr@dykema.com ddell@dykema.com PROOF OF SERVICE I certify under penalty of perjury that a copy of the foregoing Motion to Dismiss and this Proof of Service were served on the other counsel of record at his or her address on the record in the manner described in Fed. R. Civ. P. 5(b)(2)(C) by “mailing it to the person's last known address” on March 27, 2017 /s/Larry A. Reeve Legal Administrative Assistant to David M. Dell Case 1:17-cv-00262-GJQ-PJG ECF No. 5 filed 03/27/17 PageID.158 Page 24 of 24 UNITED STATES DISTRICT COURT IN THE WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION MICHAEL KARMOL, Plaintiff, vs. OCWEN LOAN SERVICING, LLC, KARESSA ROLLINS, TROTT & TROTT, P.C. AND ALL INTERESTED PARTIES Defendants. Case No. 17-cv-262 Honorable Gordon J. Quist Magistrate Judge Phillip J. Green EXHIBIT LIST FOR DEFENDANT OCWEN LOAN SERVICING, LLC’S MOTION TO DISMISS 1. Mortgage 2. Assignment 3. Discharge of Debtor 4. Bankruptcy Order Denying Debtor’s Motion for Sanctions 5. Opinion Regarding Motion to Dismiss 6. Unpublished Opinions Case 1:17-cv-00262-GJQ-PJG ECF No. 5-1 filed 03/27/17 PageID.159 Page 1 of 1 Exhibit 1 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.160 Page 1 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.161 Page 2 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.162 Page 3 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.163 Page 4 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.164 Page 5 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.165 Page 6 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.166 Page 7 of 8 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-2 filed 03/27/17 PageID.167 Page 8 of 8 Exhibit 2 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-3 filed 03/27/17 PageID.168 Page 1 of 2 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-3 filed 03/27/17 PageID.169 Page 2 of 2 Exhibit 3 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-4 filed 03/27/17 PageID.170 Page 1 of 3 Form B18 (Official Form 18)(07/08) United States Bankruptcy Court Western District of Michigan One Division Ave., N. Room 200 Grand Rapids, MI 49503 IN RE: Debtor(s) (name(s) used by the debtor(s) in the last 8 years, including married, maiden, trade, and address): Michael J Karmol 4531 Don Street Holt, MI 48842 SSN: xxx−xx−7673 Debtor(s) Case Number 11−11241−jdg Chapter 7 Honorable James D. Gregg DISCHARGE OF DEBTOR It appearing that the debtor is entitled to a discharge, IT IS ORDERED: The debtor is granted a discharge under section 727 of title 11, United States Code, (the Bankruptcy Code). BY THE COURT Dated: February 9, 2012 SEE THE BACK OF THIS ORDER FOR IMPORTANT INFORMATION. Case:11-11241-jtg Doc #:19 Filed: 02/09/12 Page 1 of 2Case 1:17-cv-00262-GJQ-PJG ECF No. 5-4 fil 3/27/ 7 PageID.171 Page 2 of 3 FORM B18 continued (07/08) EXPLANATION OF BANKRUPTCY DISCHARGE IN A CHAPTER 7 CASE This court order grants a discharge to the person named as the debtor. It is not a dismissal of the case and it does not determine how much money, if any, the trustee will pay to creditors. Collection of Discharged Debts Prohibited The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor. [In a case involving community property: There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case.] A creditor who violates this order can be required to pay damages and attorney's fees to the debtor. However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. Also, a debtor may voluntarily pay any debt that has been discharged. Debts That are Discharged The chapter 7 discharge order eliminates a debtor's legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt existed on the date the bankruptcy case was filed. (If this case was begun under a different chapter of the Bankruptcy Code and converted to chapter 7 , the discharge applies to debts owed when the bankruptcy case was converted.) Debts that are Not Discharged. Some of the common types of debts which are not discharged in a chapter 7 bankruptcy case are: a. Debts for most taxes; b. Debts incurred to pay nondischargeable taxes (applies to cases filed on or after 10/17/2005); c. Debts that are domestic support obligations; d. Debts for most student loans; e. Debts for most fines, penalties, forfeitures, or criminal restitution obligations; f. Debts for personal injuries or death caused by the debtor's operation of a motor vehicle, vessel, or aircraft while intoxicated; g. Some debts which were not properly listed by the debtor; h. Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged; i. Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts. j. Debts owed to certain pension, profit sharing, stock bonus, other retirement plans, or to the Thrift Savings Plan for federal employees for certain types of loans from these plans (applies to cases filed on or after 10/17/2005). This information is only a general summary of the bankruptcy discharge. There are exceptions to these general rules. Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in this case. Case:11-11241-jtg Doc #:19 Filed: 02/09/12 Page 2 of 2Case 1:17-cv-00262-GJQ-PJG ECF No. 5-4 fil 3/27/ 7 PageID.172 Page 3 of 3 Exhibit 4 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-5 filed 03/27/17 PageID.173 Page 1 of 3 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF MICHIGAN In re: Case No. GL 11-11241-jtg MICHAEL J. KARMOL, Chapter 7 Debtor. Hon. John T. Gregg / ORDER DENYING DEBTOR’S MOTION FOR SANCTIONS This matter comes before the court in connection with the Emergency Motion for Sanctions Against Ocwen Loan Servicing, LLC, Potestivo & Associates, Its Attorney, Summer Parker, and Emergency Motion to Cancel Sheriff’s Sale [Dkt. No. 24] (the “Motion”) filed by Michael J. Karmol (the “Debtor”), acting pro se. The court conducted a hearing on the Motion on April 28, 2016, at which the Debtor, Elizabeth Kanous, Esq., counsel for Potestivo & Associates (“Potestivo”) and Summer Parker, and David Dell, Esq., counsel for Ocwen Loan Servicing, LLC (“Ocwen”), appeared. At the conclusion of the hearing, the court issued a bench opinion in which it decided to deny the Motion. This Order is intended to supplement the bench opinion given at the hearing and serve as the court’s findings of fact and conclusions of law. Fed. R. Bankr. P. 7052. The Motion seeks sanctions against Ocwen, Potestivo and Ms. Parker individually, for their alleged violations of the discharge injunction by attempting to foreclose on a mortgage on the Debtor’s residence. The Debtor granted a mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”) in 2004. The mortgage was serviced by GMAC Mortgage Corporation (“GMAC”) when the mortgage was granted, and when the Debtor filed for bankruptcy in 2011. The Debtor received his discharge [Dkt. No. 19] on February 9, 2012. Notably, the discharge order provides that while the Debtor’s legal obligation to pay the debt associated with the mortgage was discharged, a creditor with a valid mortgage against the Debtor’s property has the right to enforce that lien if the lien was not avoided or eliminated in the bankruptcy case. No order avoiding the lien held by MERS and serviced by GMAC was entered in the Debtor’s bankruptcy case. The servicing of the Debtor’s mortgage was transferred from GMAC to Ocwen in 2013. In January 2016, MERS assigned the mortgage on the Debtor’s property to Ocwen. At this time, the Debtor was delinquent on his mortgage and Ocwen, through its counsel, Potestivo, began foreclosure proceedings. In March 2016, the Debtor received several statements from Ocwen indicating the past-due balance on the mortgage and a letter from Ms. Parker verifying the debt at the Debtor’s request. The Debtor asserts that these communications and the foreclosure proceedings are an attempt to collect an obligation that was discharged in his bankruptcy case. Case:11-11241-jtg Doc #:37 Filed: 05/02/16 Page 1 of 2Case 1:17-cv-00262-GJQ-PJG ECF No. 5-5 fil 3/27/ 7 PageID.174 Page 2 of 3 In a Chapter 7 bankruptcy case, liens such as mortgages pass through the bankruptcy case unaffected. Dewsnup v. Timm, 502 U.S. 410, 417 (1992); Talbert v. City Mortg. Servs. (In re Talbert), 344 F.3d 555, 561 (6th Cir. 2003). Accordingly, although a secured creditor may not seek to collect from a debtor personally, a creditor holding a valid lien may seek to enforce its lien against the property in which it holds a security interest. A creditor may also seek or obtain periodic payments associated with its security interest in lieu of enforcing its lien by foreclosure. 11 U.S.C. § 524(j)(3). In this matter, the court found on the record that neither Ocwen, Potestivo nor Ms. Parker attempted to collect a discharged obligation. Instead, Ocwen and its attorneys sought to enforce Ocwen’s lien rights in the Debtor’s property and to inform the Debtor as to the amounts due in order to avoid a foreclosure. The court therefore decided to deny the Motion. NOW, THEREFORE, IT IS HEREBY ORDERED that the Motion is denied. IT IS FURTHER ORDERED that the Clerk shall serve a copy of this Order pursuant to Fed. R. Bankr. P. 9022 and LBR 5005-4 upon Elizabeth Kanous, Esq., David Dell, Esq., and Scott Chernich, Esq. The Clerk shall also serve a copy of this order by first-class United States mail, postage prepaid, upon: Michael Karmol 4531 Don Street Holt, MI 48842 [END OF ORDER] Signed: May 2, 2016 Case:11-11241-jtg Doc #:37 Filed: 05/02/16 Page 2 of 2Case 1:17-cv-00262-GJQ-PJG ECF No. 5-5 fil 3/27/ 7 PageID.175 Page 3 of 3 Exhibit 5 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.176 Page 1 of 7 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION __________________________ MICHAEL KARMOL, Plaintiff, v. Case No. 1:16-CV-1178 OCWEN LOAN SERVICING, LLC, HON. GORDON J. QUIST Defendant. _____________________________/ OPINION REGARDING MOTION TO DISMISS Plaintiff, Michael Karmol, proceeding pro se, sued Defendant, Ocwen Loan Servicing, LLC, alleging claims for violation of the Michigan Consumer Protection Act (MCPA), M.C.L. §§ 445.901, et seq.; the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1962 (c) and (c); the Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq.; unjust enrichment; fraud; and breach of contract. Karmol’s claims against Ocwen arise out of Ocwen’s acts or conduct as the servicer of Karmol’s mortgage. Ocwen has filed a motion to dismiss all of Karmol’s claims for failure to state a claim. Karmol has failed to respond within the time allowed under Local Rule 7.2(c). For the following reasons, the Court will grant Ocwen’s motion and dismiss Karmol’s claims in their entirety with prejudice. Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.169 Page 1 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.177 Page 2 of 7 I. BACKGROUND The following facts are based on the allegations in the complaint, matters of public record, and exhibits attached to Ocwen’s motion that are referred to in the complaint.1 On April 22, 2004, Karmol obtained a mortgage loan from GMAC Mortgage Corporation in the amount of $116,471.00. (ECF No. 1-2.) As security for repayment of the loan, Karmol granted a mortgage (the Mortgage) to Mortgage Electronic Residential Systems (MERS), as nominee for GMAC, on real property located at 4531 Don Street, Holt, Michigan 48842. (Id.) The Mortgage was recorded in the Ingham County Register of Deeds on May 13, 2004. On December 24, 2015, MERS assigned the Mortgage to Ocwen pursuant to a Corporate Assignment of Mortgage. (Id.) The Corporate Assignment of Mortgage was recorded in the Ingham County Register of Deeds on January 15, 2016.2 (Id.) Karmol filed his complaint in this case on September 26, 2016. It appears that Karmol used a form complaint that he obtained from some source, possibly the internet. The complaint generally alleges that Ocwen illegally charged late fees, misapplied unspecified payments, mishandled his escrow account, and charged marked-up fees for default-related services. (ECF No. 1 at PageID.2-5.) 1Although a court is normally precluded from considering matters outside of the pleadings in addressing a motion under Rule 12(b)(6), courts may consider various documents without converting the motion to a motion for summary judgment. “When a court is presented with a Rule 12(b)(6) motion, it may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant’s motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir. 2008) (citation omitted). 2Although not referenced in Karmol’s complaint, Ocwen submits exhibits showing that Karmol filed a bankruptcy petition on November 8, 2011, and was granted a discharge on February 9, 2012. (ECF No. 6-4.) On April 15, 2016, Karmol filed a motion for sanctions in the bankruptcy court, arguing that Ocwen violated the discharge injunction by attempting to foreclose on the Mortgage. The bankruptcy denied the motion on May 2, 2016 because the mortgage lien survived the discharge. (ECF No. 6-5 at PageID.146.) 2 Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.170 Page 2 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.178 Page 3 of 7 II. MOTION STANDARD Karmol has not responded to the instant motion within the time allowed under Western District of Michigan Local Rule 7.2(c). Accordingly, the Court may treat Karmol’s failure as an abandonment or waiver of all of his claims. See Fredericks v. Allquest Home Mortg. Corp., No. 15- 10429, 2015 WL 1966856, at *2 (E.D. Mich. Apr. 30, 2015) (“The Court first notes that Plaintiff failed to file a timely response to Defendants’ motion. This alone may be sufficient grounds to grant it.”); Burke v. Morgan, No. 06-CV-348-JMH, 2009 WL 514314, at *2 (E.D. Ky. Mar. 2, 2009) (noting that when a plaintiff fails to respond to a motion to dismiss, a court may treat such failure as a knowing abandonment of the claim). However, the Court has also reviewed Ocwen’s motion on its merits under the applicable Rule 12(b)(6) motion to dismiss standard, see Abbas v. Bank of Am. N.A., No. 1:12-CV-607, 2013 WL 1340309, at *2 (W.D. Mich. Mar. 29, 2013), and concludes that all of Karmol’s claims fail as a matter of law. III. DISCUSSION A. MCPA Claim In Count I, Karmol alleges that Ocwen violated § 3(1) of the MCPA. This claim fails because § 4(1)(a) of the MCPA exempts from its coverage “[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” Michigan courts have specifically held that residential mortgage loan transactions fall under this exemption. Newton v. West, 262 Mich. App. 434, 438-39, 686 N.W.2d 491, 193-94 (2004). Therefore, the MCPA claim will be dismissed. B. RICO Claims In Counts II and III, Karmol alleges that Ocwen violated RICO, 18 U.S.C. §§ 1962(c) and (d). Subsection (c) makes it 3 Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.171 Page 3 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.179 Page 4 of 7 unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. 18 U.S.C. § 1962(c). Subsection (d) makes it unlawful “for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). To state a RICO claim, a plaintiff must allege “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S. Ct. 3275, 3285 (1985). In addition, a plaintiff must allege that “the RICO enterprise engaged in a ‘pattern of racketeering activity’ consisting of at least two predicate acts of racketeering activity occurring within a ten-year period.” Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006). For his predicate acts, Karmol alleges that Ocwen committed mail and wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343. Predicate acts based on mail or wire fraud must satisfy Rule 9(b)’s heightened pleading standard. Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 404 (6th Cir. 2012). “This rule requires a plaintiff: (1) to specify the allegedly fraudulent statements; (2) to identify the speaker; (3) to plead when and where the statements were made; and (4) to explain what made the statements fraudulent.” Republic Bank & Trust Co. v. Bear Stearns & Co., 683 F.3d 239, 247 (6th Cir. 2012). Karmol’s allegations, which are nothing more than conclusory statements of fraud, fall far short of meeting the Rule 9(b) standard. Therefore, Counts II and III are subject to dismissal. C. FDCPA Claim In Count IV, Karmol alleges that Ocwen violated 15 U.S.C. § 1692e, which prohibits debt collectors from “us[ing] any false, deceptive, or misleading misrepresentation or means in connection with the collection of any debt.” Karmol alleges that Ocwen “knowingly, affirmatively, and actively concealed and suppressed material facts, namely that [Ocwen] assessed borrowers’ 4 Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.172 Page 4 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.180 Page 5 of 7 accounts for marked-up default-related services. Contrary to Ocwen’s communications, they are not legally authorized to assess and collect these marked-up fees.” (ECF No. 1 at PageID.50.) Such conclusory allegations, without any supporting facts as to how Ocwen violated § 1692e-what misrepresentations were made and when they were made-are insufficient to show “more than a sheer possibility that [Ocwen] has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949 (2009). Thus, the FDCPA claim will be dismissed. D. Unjust Enrichment In Count V, Karmol alleges that Ocwen was unjustly enriched by charging marked-up prices for default-related services. Karmol admits that the mortgage permitted Ocwen to charge for such services, but he claims that Ocwen was unjustly enriched by overcharging Karmol. (Id. at PageID.51-52.) Karmol’s unjust enrichment claim fails because “courts will not imply a contract where there is an express contract governing the same subject matter.” Bowlers’ Alley, Inc. v. Cincinnati Ins. Co., 32 F. Supp. 2d 824, 833 (E.D. Mich. 2014) (citing Fodale v. Waste Mgmt. of Mich., Inc., 271 Mich. App. 11, 36, 718 N.W.2d 827, 841 (2006)). Because the mortgage governs parties’ rights and obligations with regard to the alleged default-related services, Karmol’s unjust enrichment claim fails. E. Fraud Karmol alleges a claim of fraud in Count VI, based on the same allegations that Ocwen failed to disclose that it had marked up the fees it charged Karmol for default-related services. Karmol’s fraud allegations suffer from the same defect as his RICO allegations-failure to comply with Rule 9(b)’s particularity requirement. According, the fraud claim will be dismissed. F. Breach of Contract To establish a claim for breach of contract, Karmol must allege: (1) the existence of a contract; and (2) a breach of that contract by the defendant. See Stoken v. J.E.T. Elecs. & Tech., 5 Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.173 Page 5 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.181 Page 6 of 7 Inc., 174 Mich. App. 457, 463, 436 N.W.2d 389, 392 (1998) (per curiam). Karmol alleges that the mortgage was his contract with Ocwen, and that Ocwen breached the mortgage agreement “by misapplying payments submitted by Plaintiff, placing such payments in suspense accounts without authorization by the mortgage agreements [sic], and assessing late fees not authorized under the mortgage agreement.” (Id. at PageID.56.) Karmol’s conclusory allegations, unsupported by any specific facts, such as particular payments that Ocwen misapplied, fail to properly allege a breach of contract by Ocwen. See Alshaibani v. Litton Loan Servicing, LP, 528 F. App’x 462, 465 (6th Cir. 2013) (“As a practical matter, Plaintiffs’ factually unadorned allegation that Litton misapplied their payments does no more to render their claim plausible than would a simple legal conclusion that Litton breached the mortgage.”); Rudley v. Bank of Am. Home Loans Servicing LP, No. 1:11-CV- 1374, 2013 WL 2407614, at *4 (W.D. Mich. May 31, 2013) (noting that the plaintiff failed to allege facts showing how or where her payments were misapplied or what provision of the contract the defendant breached by applying the plaintiff’s payments in the alleged manner). Thus, the breach of contract claim must be dismissed. IV. CONCLUSION For the foregoing reasons, the Court will grant Ocwen’s motion to dismiss and dismiss Karmol’s complaint. An Order consistent with this Opinion will be entered. Dated: December 11, 2016 /s/ Gordon J. Quist GORDON J. QUIST UNITED STATES DISTRICT JUDGE 6 Case 1:16-cv-01178-GJQ-PJG ECF No. 9 filed 12/11/16 PageID.174 Page 6 of 6Case 1:17-cv-0 262-GJQ-PJG ECF No. 5-6 filed 03/27/17 PageID.182 Page 7 of 7 Exhibit 6 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.183 Page 1 of 14 David Dell Positive As of: March 26, 2017 5:57 PM EDT Bingham v. Bank of Am., N.A. United States District Court for the Eastern District of Michigan, Southern Division September 14, 2010, Decided; September 14, 2010, Filed Case No. 10-11917 Reporter 2010 U.S. Dist. LEXIS 95455 *; 2010 WL 3633925 Angela Bingham and Mattie Williams, Plaintiffs, v. Bank of America, N.A., a Michigan corporation, et al., Defendants. Subsequent History: Reconsideration denied by Bingham v. Bank of Am., 2010 U.S. Dist. LEXIS 107965 ( E.D. Mich., Oct. 8, 2010) Core Terms Plaintiffs', modification, alleged oral promise, modify, mortgage, promised, financial institution, foreclosure Counsel: [*1] For Angela Bingham, Mattie Williams, Plaintiffs: Darwyn P. Fair, Detroit, MI. For Bank of America, Department of Housing and Urban Development, Defendants: Martin S. Frenkel, Courtney D. Roschek, Maddin, Hauser, Southfield, MI. Judges: Honorable Sean F. Cox, United States District Judge. Opinion by: Sean F. Cox Opinion OPINION & ORDER GRANTING DEFENDANTS' MOTION TO DISMISS In this action, Plaintiffs assert various claims against their mortgage lenders, which are all based on an alleged oral promise by Defendants regarding modifying Plaintiffs' mortgage and/or foregoing their right to foreclose. The matter is currently before the Court on Defendants' Motion to Dismiss, brought pursuant to FED. R. CIV. P. 12(b)(6). The parties have briefed the issues and the Court heard oral argument on August 26, 2010. As explained below, the Court shall GRANT Defendants' motion and dismiss this action. Plaintiffs' claims, which are all based on an alleged oral promise regarding modifying Plaintiffs' mortgage and/or foregoing foreclosure, are barred by the applicable statute of frauds. BACKGROUND The property at issue in this action is located at 29235 Kensington Court, in Southfield, Michigan ("the Property"). (Compl. at ¶ 6). Plaintiffs [*2] purchased the Property in June, 2008. (Id. at ¶ 9). In February 2009, Plaintiffs experienced financial difficulties. Plaintiffs allege that they "directly contacted the Defendant(s) and their assignee or assignor, Taylor, Bean and Whitaker in order to apply for a Loan Modification." (Compl. at ¶ 10). Plaintiffs allege that Defendants "were receptive to a Loan Modification for the Plaintiffs" and that Plaintiffs sent Defendants documents for a loan modification. (Compl. at ¶¶ 10 & 11). They further allege that unidentified representatives of Defendant promised or represented that Defendants would modify Plaintiffs' loan. (Compl. at ¶ 50). They allege that notwithstanding having knowledge that Plaintiffs were attempting to enter into a loan modification in order to keep possession of their home, Defendants foreclosed on the Property without allowing Plaintiffs to modify the loan. (Compl. at ¶¶ 24 & 25). It is undisputed that: 1) Defendant HUD purchased the Property at the July 28, 2009 Sheriff's Sale (see Ex.C to Defs.' Motion); 2) the Sheriff's Deed was recorded on August 4, 2009; 3) the redemption period expired on January 28, 2010; and 4) Plaintiffs did not cure the default before the [*3] expiration of that period. (Pls.' Resp. Br. at 2). On April 7, 2010, Plaintiffs filed this action against Defendants Bank of America, NA ("BOA") and The Department of Housing and Urban Development ("HUD") in Oakland County Circuit Court. Plaintiffs' Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.184 Page 2 of 14 Page 2 of 3 David Dell complaint asserts the following counts: Quiet Title" (Count I); "Unjust Enrichment" (Count II); "Breach of Implied Agreement/Specific Performance" (Count III); "Innocent/Negligent Misrepresentation" (Count IV); "Intentional Misrepresentation" (Count V); "Fraud, Based Upon Silent Fraud and Bad Faith Promises" (Count VI); "Constructive Trust" (Count VII); "Breach of Public Policy for the State of Michigan" (Count VIII); and "Injunction" (Count IX). Defendants removed the action to this Court on May 12, 2010, asserting diversity jurisdiction and jurisdiction under 28 U.S.C. § 1442. On May 17, 2010, Defendants filed the instant motion. Defendants ask the Court to dismiss Plaintiffs' claims, pursuant to FED. R. CIV. P. 12(b)(6). ANALYSIS A. All Claims In This Action Are Based Upon An Alleged Oral Promise By Defendants Regarding Modifying Plaintiffs' Mortgage And/Or Foregoing Foreclosure And They Are Therefore Barred By M.C.L. § 566.132(2). Defendants' [*4] motion seeks dismissal of Plaintiffs' claims on several grounds. Notably, in responding to Defendants' motion, Plaintiffs confirm that their claims are all based on an alleged oral promise by Defendants regarding modifying Plaintiffs' mortgage and/or foregoing foreclosure: Defendants' Motion for Summary Judgment has missed the gravamen of Plaintiffs' Verified Complaint. Plaintiffs' Complaint is simple and straight forward. Defendants mislead [sic] Plaintiffs and their representatives into believing that they would obtain a Loan Modification before Defendants would go forward with a Sheriff Sale. If the Plaintiffs or their representative had known that Defendants would go forward with the Sheriff Sale, Plaintiffs would have filed a Chapter 13 bankruptcy, obtained a TRO or confirmed in writing that Defendants would adjourn the Sheriff Sale until after the Loan Modification decision was made. (Pls.' Br. at ii) (emphasis added). Plaintiffs claim that after they submitted loan modification paperwork, an unidentified representative of Defendants orally promised that Defendants would not go through with the Sheriff's sale. (See 8/26/10 Hearing Tr.). Defendants contend that because all of Plaintiffs' [*5] claims are based on Defendants' alleged oral promises regarding loan modification/foregoing right to foreclose on the mortgage, the claims are barred by the applicable statute of frauds, M.C.L. § 566.132. The Court agrees. Michigan's statute of frauds, M.C.L. § 566.132, "requires certain types of agreements to be in writing before they can be enforced." Crown Technology Park v. D&N Bank, FSB, 242 Mich.App. 538, 548, 619 N.W.2d 66 (2000). The statute provides, in pertinent part: (2) An action shall not be brought against a financial institution to enforce any of the following promises or commitments of the financial institution unless the promise or commitment is in writing and signed with an authorized signature by the financial institution: (a) A promise or commitment to lend money, grant or extend credit, or make any other financial accommodation. (b) A promise or commitment to renew, extend, modify, or permit a delay in repayment or performance of a loan, extension of credit, or other financial accommodation. (c) A promise or commitment to waive a provision of a loan, extension of credit, or other financial accommodation. M.C.L. § 566.132(2). In Crown Technology Park, the Michigan Court of Appeals held [*6] that above "language is unambiguous. It plainly states that a party is precluded from bringing a claim - no matter its label - against a financial institution to enforce the terms of an oral promise to waive a loan provision." Crown Technology Park, 242 Mich.App. at 550. The court explained that the above section of the statute "specifically bars 'an action.' By not specifying what sort of 'action' M.C.L. § 566.132(2) prohibits, we read this as an unqualified and broad ban." Id. That is, "the Legislature used the broadest possible language" in M.C.L. § 566.132(2) "to protect financial institutions by not specifying the types of 'actions' it prohibits, eliminating the possibility of creative pleading to avoid the ban." Id. at 551 (emphasis added). Here, Plaintiffs have attempted to do just that - use creative pleading to avoid the ban. Plaintiffs' complaint asserts nine separate counts. Despite the various labels Plaintiffs attach to these counts, however, each count 1 1 At the hearing, Plaintiffs Counsel asserted that Plaintiffs' silent fraud claim should not be barred by the statute of frauds 2010 U.S. Dist. LEXIS 95455, *3 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.185 Page 3 of 14 Page 3 of 3 David Dell is based on an alleged promise by Defendants to modify Plaintiffs' mortgage and/or forego its right to foreclose. Notably, nowhere in Plaintiffs' complaint do they allege that there is any agreement in writing, signed [*7] with an authorized signature by Defendants, wherein Defendants made such promises. In addition, any alleged oral promises fall squarely within the express language of the statute and are barred by M.C.L. § 566.132(2). Crown Technology Park, supra; see also Ajami v. IndyMac Mort. Svs., 2009 U.S. Dist. LEXIS 107129, 2009 WL 3874680 (E.D. Mich. 2009) (plaintiffs' claim based on alleged oral promise regarding modifying plaintiff's mortgage is barred by M.C.L. § 566.132(2)). Accordingly, the Court shall dismiss Plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(6). CONCLUSION & ORDER For the reasons set forth above, IT IS ORDERED that Defendants' Motion to Dismiss is GRANTED and Plaintiffs' complaint is DISMISSED. IT IS SO ORDERED. /s/ Sean F. Cox Sean F. Cox United States District Judge Dated: September 14, 2010 End of Document because it is not based on an alleged oral promise, but rather, is based on a failure to disclose by Defendants. The Court disagrees. To establish an actionable claim of silent fraud, a plaintiff must "show some type of representation by words or actions that was false or misleading and was intended to deceive." Roberts v. Saffell, 280 Mich.App. 397, 404, 760 N.W.2d 715 (2008). Here, Plaintiffs do not dispute that they had actual notice of the foreclosure proceedings and the Sheriff's sale. Rather, Plaintiffs allege that they submitted loan modification paperwork to Defendants during the foreclosure process and that an unidentified representative [*8] of Defendants orally promised that Defendants would not "go through with" the Sheriff's sale after receiving the loan modification package. (See 8/26/10 Hearing Tr.). Thus, the silent fraud claim, like all the other claims, is based on an alleged oral promise. 2010 U.S. Dist. LEXIS 95455, *6 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.186 Page 4 of 14 David Dell Positive As of: March 26, 2017 5:58 PM EDT Cromer v. Safeco Ins. Co. of Am. United States District Court for the Eastern District of Michigan, Southern Division April 14, 2010, Argued; April 14, 2010, Decided; April 14, 2010, Filed Case No. 2:09-cv-13716 Reporter 2010 U.S. Dist. LEXIS 36630 *; 2010 WL 1494469 LANIE A. CROMER, Plaintiff, vs. SAFECO INSURANCE COMPANY OF AMERICA, Defendant. Core Terms bad-faith, attorney's fees, alleges, court of appeals, outrageous, damages, insured, consequential damages, insurance claim, insurance company, tortious, intentional infliction of emotional distress, fail to pay, benefits, fail to state a claim, consumer protection, plaintiff's claim, handling, asserts, houses, cause of action, contractual, alleged breach of contract, emotional distress, insurance contract, outrageous conduct, tort action, Practices, policies, losses Counsel: [*1] For Lanie A Cromer, Plaintiff: Allen J. Counard, LEAD ATTORNEY, Counard and Heilmann, Trenton, MI. For Safeco Insurance Company of America, Defendant: F. Peter Blake, LEAD ATTORNEY, Blake, Kirchner, Detroit, MI. Judges: PRESENT: Honorable Gerald E. Rosen, Chief Judge, United States District Judge. Opinion by: Gerald E. Rosen Opinion OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL DISMISSAL At a session of said Court, held in the U.S. Courthouse, Detroit, Michigan on April 14, 2010 PRESENT: Honorable Gerald E. Rosen, Chief Judge, United States District Court I. INTRODUCTION Plaintiff Lanie Cromer ("Cromer") filed this action alleging that Defendant Safeco Insurance Company ("Safeco") breached its insurance contract with her. Cromer owned two adjacent houses in Detroit, Michigan insured with Safeco. As a result of a fire in March of 2008, both of these houses were damaged or destroyed. Cromer filed an insurance claim with Safeco and her claim was denied. 1 Cromer alleges Safeco denied her claim in bad-faith and did so in a way which caused her emotional distress and violated Michigan consumer protection laws. As a consequence, in addition to any amounts which she alleges to be due under the contract, Cromer is [*2] also seeking consequential damages, including attorney fees, for having to litigate her claim. This matter is presently before the Court on Defendant Safeco's Fed. R. Civ. P. 12(b)(6) Motion for Partial Dismissal of Plaintiff's Complaint. In this motion, Safeco seeks dismissal of Cromer's Michigan Consumer Protection Act claim, her various tort claims, and her claim for attorney fees as consequential damages, arguing that these claims are not supported by Michigan law. This motion has been fully briefed by the parties. Having reviewed these briefs, the Court has determined that oral argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local Rule 7.1(e)(2), this matter will be decided on the briefs. This Opinion and Order sets forth the Court's ruling. II. FACTUAL BACKGROUND 1 There are two separate insurance claims included in this matter: (1) 14703 Alma Street; and ( 2) 14711 Alma Street. Together, however, they form Plaintiff's cause of action ("claim") against Defendant for breach of contract as both houses were damaged or destroyed by fire and both houses were insured by Safeco. Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.187 Page 5 of 14 Page 2 of 7 David Dell As alleged in the Complaint, this case arises out of a house fire which occurred [*3] at Cromer's house at 14703 Alma Street in Detroit, Michigan, and spread to an adjacent house at 14711 Alma Street, which she also owned. Cromer's houses were insured by Defendant Safeco under policy numbers OK 632187 for the house at 14703 Alma Street and OK 633498 for the house at 14711 Alma Street, and she alleges the policies covered the properties against fire, vandalism and theft losses, as well as the contents and loss of rental income. Safeco admits that insurance policies were in effect for the two houses at the time of the fire loss. Cromer alleges that she timely informed Safeco of the fire losses, provided reasonable proof of her claim, and performed all necessary conditions for being paid on the claim. As a result of the fire, she claims to have incurred damages and expenses which are, or should be, covered by her policies. However, Safeco has not paid the claim. Cromer alleges the reason Safeco gave her for not paying the insurance claim was that "the fire was intentionally set by [her] or persons in privity with [her]…[and]…[she] made misrepresentation[s] and concealment of material facts including the cause of the fire." [Complaint, PP 18-19.]. Cromer further asserts that [*4] after she made a statement under oath, Safeco had no factual basis for denying her claim. Because Safeco still did not pay her claim following her statement, she alleges neglect in the handling of her claim, neglect in Safeco's refusal to pay her claim, and that Safeco's conduct amounted to a bad-faith breach of her contract. Based on her version of events, Cromer claims to have a reasonable expectation of coverage "under the circumstances of this case" and that she has not only suffered loss, but she will also suffer future losses. Cromer also alleges that Safeco's failure to pay her claim in a timely manner is being done in an "intentional, tortious and tortuous" manner and is, "extreme and outrageous and done with injurious intent or reckless disregard for the consequences to [her]." [Id., PP 25-26.]. Although Cromer's Complaint does not list individual counts, she is claiming she is owed: (1) Amounts due under her insurance contract for her fire losses; (2) 12% statutory interest pursuant to M.C.L. § 500.2006 for failing to pay the claim in excess of 60 days after reasonable proof of loss; (3) Damages for bad-faith adjustment of her claim, which she asserts is a violation of the Michigan [*5] Consumer Protection Act ("MCPA"), M.C.L. § 445.901, et seq.; (4) Damages for bad-faith adjustment of her claim, which she asserts is a violation of the Michigan [Uniform] Trade Practices Act ("UTPA"), M.C.L. § 500.2001, et seq.; (5) Damages for Safeco's conduct "and or acts and omissions and failure to timely pay amounts due to Plaintiff [since they are] intentional, tortious, and tortuous . . . [and] . . . extreme and outrageous and done with injurious intent or reckless disregard for the consequences to the Plaintiff."; and, (6) Future losses and consequential damages, including attorney fees. In Safeco's answer to the complaint, it admits it did issue insurance policies on the two houses in question and that a letter was sent to her on July 2, 2009 outlining its reasons for denying her claim. Safeco also asserts that, "the insurance policy speaks for itself" with regard to what insurance benefits Cromer is or is not entitled. [Answer, P 9.]. The Court has neither seen nor considered the July 2, 2009 letter from Defendant to Plaintiff nor the two insurance policies themselves as they have not been attached to any of the pleadings this Court reviewed. In this motion, Safeco seeks dismissal [*6] of all of Plaintiff's claims, except Plaintiff's breach of contract claim and any damages which may eventually be due to her pursuant to the UTPA, if she is ultimately successful in this matter. III. STANDARD OF REVIEW Fed. R. Civ. P. 12(b)(6) requires dismissal of a complaint if it "fail[s] to state a claim upon which relief can be granted. . . ." Analysis under Rule 12(b)(6) is appropriate where the Court is considering the pleadings themselves. In deciding a Fed R. Civ. P. 12(b)(6) motion, the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded factual allegations as true. Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006). While this standard is liberal, it does require that plaintiff's allegations rise above the level of labels, conclusions, and formulaic recitations of the elements of a cause of action. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007); see also First Am. Title Co. v. Devaugh, 480 F.3d 438, 444 (6th Cir. 2007). The complaint "must contain either direct or inferential 2010 U.S. Dist. LEXIS 36630, *2 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.188 Page 6 of 14 Page 3 of 7 David Dell allegations with respect to all material elements necessary to sustain a recovery under some viable legal theory." Weiner v. Klais and Co., Inc., 108 F.3d 86, 88 (6th Cir. 1997). [*7] "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic, 550 U.S. at 555 (citations omitted). Courts do not require "heightened fact pleading of specifics, but only enough to state a claim for relief that is plausible on its face." Id. at 570; see also Ashcroft v. Iqbal, U.S. , 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009). In the aftermath of Iqbal, this Court must consider the plausibility of the pleaded facts before determining whether those facts, if true, give rise to an actionable claim, and, therefore, a complaint must cross the line between possibility and plausibility of relief. 129 S. Ct. at 1949. Of course, determining whether a complaint states a plausible claim is context-specific. Id. IV. DISCUSSION A. CROMER'S CLAIM FOR BAD-FAITH HANDLING OF AN INSURANCE CLAIM IS NOT RECOGNIZED IN MICHIGAN LAW. 1. There is No Tort of Bad-Faith Handling of an Insurance Claim in Michigan. Cromer seeks damages alleging bad-faith on the part of Safeco in failing to pay her claim. However, the Michigan courts have refused to recognize bad-faith breach of an [*8] insurance contract as a separate and independent tort. When addressing this issue, the Michigan Court of Appeals stated: "[a] plaintiff cannot maintain an action in tort for nonperformance of a contract. There must be a separate and distinct duty imposed by law. An alleged bad-faith breach of an insurance contract does not state an independent tort claim." Casey v. Auto Owners Ins. Co., 273 Mich.App. 388, 729 N.W.2d 277, 286 (2006). Cromer relies upon Hart v. Ludwig, 347 Mich. 559, 79 N.W.2d 895 (1956), in stating: "[t]he law imposes an obligation upon everyone who attempts to do anything, even gratuitously, for another, to exercise some degree of care and skill in the performance of what he has undertaken, for nonperformance of which duty an action lies." 79 N.W.2d at 898. However, the Michigan Supreme Court quoted Hart, supra, in Kewin v. Massachusetts Mut. Life Ins. Co. 409 Mich. 401, 295 N.W.2d 50 (1980), another insurance breach of contract case, and said: We have simply the violation of a promise to perform the agreement. The only duty, other than that voluntarily assumed in the contract to which the defendant was subject, was his duty to perform his promise in a careful and skillful [*9] manner without risk of harm to others, the violation of which is not alleged. What we are left with is defendant's failure to complete his contracted-for performance. This is not a duty imposed by the law upon all, the violation of which gives rise to a tort action, but a duty arising out of the intentions of the parties themselves and owed only to those specific individuals to whom the promise runs. A tort action will not lie. 409 Mich. at 422, 295 N.W.2d at 56. Similarly, in this case, Cromer merely alleges that Safeco's denial of her claim was "done in bad-faith" and that this amounted to a bad-faith adjustment of her claim. However, in Kewin, the Michigan Supreme Court expressly held that such an allegation did not give rise to a tort action when it stated: "[w]e decline … to declare the mere bad-faith breach of an insurance indemnity contract an independent and separately actionable tort and to thereby open the door to recovery for mental pain and suffering caused by breach of a commercial contract." Id. The Michigan Court of Appeals reiterated this point in Runions v. Auto-Owners Ins. Co., 197 Mich.App. 105, 495 N.W.2d 166 (1992), another homeowner case in which the insurance company, [*10] following a fire, had not paid under the contract. There the court stated: The only conduct alleged by plaintiff as being tortious is defendants' failure to pay the claim. The facts alleged fall "far short of the conduct which is considered tortiously outrageous." At most, it attempts to plead the nonexistent tort of bad-faith handling of an insurance claim. The trial court properly held that plaintiff's complaint failed to state a claim. 495 N.W.2d at 168 (citing Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 374 N.W.2d 905, 909 (1985)). The Court of Appeals reemphasized this point in Isagholian v. Transamerica Ins. Corp., 208 Mich.App. 9, 527 N.W.2d 13 (1994), a case between a homeowner and an insurance company where the insurer did not pay benefits following a theft. The court there held that an insurer's bad-faith failure to pay its contractual obligation is insufficient to establish an independent tort 2010 U.S. Dist. LEXIS 36630, *6 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.189 Page 7 of 14 Page 4 of 7 David Dell action and upheld the dismissal of that count of the homeowner's action. 527 N.W.2d at 17. Here, Cromer has neither alleged, nor made any showing whatsoever that Safeco engaged in any conduct other than denying her claim. Under Michigan law, a separate tort action cannot be maintained [*11] for the failure to pay under an insurance contract -- even if the non-payment is done in bad-faith. Accordingly, the Court finds that Plaintiff's claim for bad- faith handling of her insurance claim fails to state a claim upon which relief may be granted, and, therefore, it will be dismissed. 2. Bad-faith Adjustment of an Insurance Claim Is Not Covered by the Michigan Consumer Protection Act. Next, Cromer alleges a violation of the Michigan Consumer Protection Act. M.C.L. § 445.903(1) makes any "[u]nfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce…unlawful." However, the statute states that "[t]his act does not apply to or create a cause of action for an unfair, unconscionable, or deceptive method, act, or practice that is made unlawful by chapter 20 of the insurance code of 1956 [the Uniform Trade Practices Act, M.C.L. § 500.2001 et seq.]." M.C.L. § 445.904(3). Indeed, the purpose of the UTPA is "to regulate trade practices in the business of insurance. . . ." See M.C.L. § 500.2002. Prior to amendments to the MCPA, § 445.904(2) did allow suits against insurance companies. See Smith v. Globe Life Ins. Co., 460 Mich 446, 597 N.W.2d 28, 39 (1999). [*12] However, § 445.904 was amended through 2000 PA 432, which eliminated the ability to pursue claims against insurance companies under the MCPA. As a result, the MCPA is not applicable to insurance companies. More precisely, the Sixth Circuit has held that insurers are not subject to suit under the MCPA to the extent that their conduct is regulated by the Insurance Code. McLiechey v. Bristol W. Ins. Co., 474 F.3d 897, 904 (2007). See also, Milhouse v. Mich. Basic Prop. Ins. Ass'n, 2005 Mich. App. LEXIS 3235, 2005 WL 3501364, at *5 (Mich.Ct.App., Dec.22, 2005) ("Thus, the [Michigan Consumer Protection Act] no longer applies to insurance companies."); Rodgers v. N. Am. Ins. Co., 2005 Mich. App. LEXIS 1725, 2005 WL 1683548, at *2-3 (Mich.Ct.App., July 19, 2005) ("2000 PA 432, eliminate[d] the ability to bring a MCPA claim against an insurance company. . ."); Kitterman v. Mich. Ed. Employees Mut. Ins. Co., 2004 Mich. App. LEXIS 1801, 2004 WL 1459523, at * 6 (Mich.Ct.App., June 29, 2004). As the foregoing authorities make clear, Michigan has exempted insurance from the provisions of the MCPA, limiting statutory recovery pursuant to remedies under the Uniform Trade Practices Act. Under the UTPA, should a plaintiff ultimately prevail on a breach of contract action, "and benefits [*13] [are] not paid on a timely basis, the claimant is entitled to 12 percent interest, irrespective of whether the claim is reasonably in dispute." Griswold Properties, L.L.C. v. Lexington Ins. Co., 276 Mich.App. 551, 741 N.W.2d 549, 557 (2007) (analyzing M.C.L. § 500.2006(4)). See also, Commercial Union Ins. Co. v. Liberty Mutual Ins. Co., 426 Mich 127, 393 N.W.2d 161, 164, n 5 (1986) (noting that M.C.L. § 500.2006(4) is intended to provide a penalty on insurers who procrastinate or are dilatory in paying). For the foregoing reasons, the Court finds that Plaintiff's claim for damages under the Michigan Consumer Protect Act fails to state a claim upon which relief may be granted and, therefore, will be dismissed. B. CROMER'S CLAIM THAT SAFECO'S CONDUCT IN NOT PAYING HER CLAIM WAS INTENTIONAL, TORTIOUS, TORTUOUS AND/OR EXTREME AND OUTRAGEOUS FAILS TO STATE A CLAIM SEPARATE FROM THE ALLEGED BREACH OF CONTRACT ITSELF. 1. Intentional and Tortious Conduct Must Involve Activity Separate and Distinct from the Alleged Breach of Contract. Cromer next asserts a claim for intentional infliction of emotional distress caused by Safeco's failure to pay her benefits, claiming that the failure to settle [*14] her claim has been "intentional and tortious." [Complaint, P 25]. The Michigan Supreme Court has never adopted the tort of intentional infliction of emotional distress into Michigan jurisprudence. See Smith v. Calvary Christian Church, 462 Mich. 679, 614 N.W.2d 590, 593 n. 7 (2000); Roberts, supra, 422 Mich. at 597, 374 N.W.2d at 907; Khalifa v. Henry Ford Hospital, 156 Mich. App. 485, 401 N.W.2d 884, 890 (1987); Andrews v. Prudential Securities, Inc., 160 F.3d 304, 309 (6th Cir. 1998). However, the Michigan Supreme Court has described the standards that would have to be met for satisfaction of such a claim: The cases thus far decided have found liability only where the defendant's conduct had been extreme and outrageous. It has not been enough that defendant acted with an intent which is tortious or 2010 U.S. Dist. LEXIS 36630, *10 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.190 Page 8 of 14 Page 5 of 7 David Dell even criminal, or that he intended to inflict emotional distress, or even that his conduct has been characterized by "malice," or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character and so extreme in degree, as to go beyond all bounds of decency, and to be regarded [*15] as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, "Outrageous!" The liability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions or other trivialities. The rough edges of our society are still in need of a good deal of filing down, and in the meantime, plaintiffs must necessarily be expected and required to be hardened to a certain amount of rough language, and to occasional acts that are definitely inconsiderate and unkind. There is no occasion for the law to intervene in every case where someone's feelings are hurt. There must still be freedom to express an unflattering opinion, and some safety valve must be left which irascible tempers may blow off relatively harmless steam. Roberts, supra, 422 Mich. at 603, 374 N.W.2d at 908- 909 (quoting Restatement 2d of Torts, § 46, comment d). Thus, to the extent a cause of action for intentional infliction of emotional distress might be recognized, to make out a prima facie case, a plaintiff must, at a minimum establish: [*16] (1) extreme or outrageous conduct, (2) which intentionally and recklessly, (3) causes extreme emotional distress. McCahill v. Commercial Union Ins. Co., 179 Mich.App. 761, 446 N.W.2d 579, 582 (1989) (citing Roberts, supra, 422 Mich. at 603, 374 N.W.2d at 908). However, Michigan law provides that "in a contractual setting, a tort action must rest on a breach of duty distinct from the contract." Roberts, supra, 422 Mich. at 602, 374 N.W.2d at 908. Additionally, the mere failure to perform an obligation under a contract "cannot give rise to a negligence action in tort." Runions, supra, 495 N.W.2d at 168 (citing Roberts, supra). Under Michigan law, an action in tort cannot be maintained where a contractual agreement exists unless a duty separate and distinct from the contractual obligation is alleged. Fultz v. Union-Commerce Associates, 470 Mich. 460, 683 N.W.2d 587, 592 (2004). In Fultz, the Michigan Supreme Court, stated: "[t]his Court and the Court of Appeals have defined a tort action stemming from misfeasance of a contractual obligation as the violation of a legal duty separate and distinct from the contractual obligation.'" Id. (citing Rinaldo's Constr. Corp. v. Michigan Bell Tel. Co., 454 Mich. 65, 559 N.W.2d 647, 658 (1997)); [*17] See also, e.g., Sherman v. Sea Ray Boats, Inc., 251 Mich.App. 41, 649 N.W.2d 783, 789 (2002) (stating that if "[t]he omission is one of nonfeasance, a failure to act, the action lies in contract only."). Cromer has failed to allege any actions by Safeco other than not having paid her claim and, therefore none independent of the alleged breach of contract. Accordingly, the Court finds that Plaintiff's intentional infliction of emotional distress claim for the mere breach of a commercial insurance contract fails to state a claim upon which relief may be granted and, therefore, will be dismissed. 2. Extreme and Outrageous Conduct Must Include Allegations Beyond the Breach of the Contract Itself. Although Cromer alleges that Safeco's conduct in failing to pay the insurance claim was "extreme and outrageous," no allegations of extreme and outrageous behavior are actually made. In fact, Cromer does not allege any conduct by Safeco other than stating they lacked a "factual basis" to deny [her] claim. In Roberts, supra, while not adopting the tort of intentional infliction of emotional distress, the Michigan Supreme Court noted that "[o]utrageous conduct causing severe emotional distress [is proven [*18] by] showing: (1) extreme and outrageous conduct [which] intentionally or recklessly causes severe emotional distress to another." 422 Mich. at 602, 374 N.W.2d at 908 (quoting Restatement 2d of Torts § 46). The Court went on to state this definition "[did] not indicate that such a cause of action could be established on evidence of an insurer's dilatory handling of a claim." Id. In fact, in Roberts, the Court concluded that even an insurer failing to supply proper forms, failing to timely respond and wrongfully denying a claim fell "far short" of extreme and outrageous conduct. 422 Mich. at 608, 374 N.W.2d at 911. Here, Cromer, does not even allege those actions which the Roberts court found fell "far short" of being extreme and outrageous. Morever, the Michigan Court of Appeals, on facts very similar to those pled in this case, found that a failure to reasonably investigate an insured's claim does not rise 2010 U.S. Dist. LEXIS 36630, *14 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.191 Page 9 of 14 Page 6 of 7 David Dell to the level of being the type of extreme and outrageous conduct which is necessary to maintain an independent cause of action in tort. Crossley v. Allstate Ins. Co., 155 Mich.App. 694, 400 N.W.2d 625 (1986). In Crossley, the plaintiff alleged mental distress damages based upon defendant's, [*19] "alleged failure to reasonably investigate his claim and alleged deliberate oppression of plaintiff to deny him benefits." 400 N.W.2d at 628. The specific allegation in support of plaintiff's claim of intentional infliction of emotional distress was that the insurance company accused him, "of arson and fraud when [it] had absolutely no evidence whatsoever to support those allegations." Id. The court dismissed the tort claim, finding no claim was made by plaintiff independent of the breach of contract, and that defendant's conduct was not "outrageous." Id. The court further found that the defendant did not publish any allegations of arson; it was merely responding to the filed proof of loss. Id. Turning to the complaint in this case, it is apparent that Cromer has not alleged any tortious conduct that is extreme and outrageous independent of the alleged breach of contract as required. Rather, she asserts only that Safeco has refused to pay benefits under the contract after she filed a proof of loss. Certainly, denials of claims are something that happen in the insurance industry on a routine basis and as the cases show, without more, the denial itself cannot give rise to separate liability [*20] in tort. Accordingly, the Court finds Plaintiff's claim for damages for intentional infliction of emotional distress for the mere breach of a commercial insurance contract fails to allege any conduct which could be construed as "extreme and outrageous" independent of the alleged breach of contract. This claim, then, fails to state a claim upon which relief may be granted and, therefore, will be dismissed. C. CROMER'S CLAIM FOR ATTORNEY FEES AS CONSEQUENTIAL DAMAGES IS NOT ALLOWED UNDER MICHIGAN LAW. Finally, Cromer seeks consequential damages "including attorney fees." Plaintiff relies on the Sixth Circuit decision in Murphy v. Cincinnati Insurance Co., 772 F.2d 273 (1985), in which the Sixth Circuit applying Michigan law, awarded attorney fees to a plaintiff as a result of having to litigate to get his insurance benefits. At the time Murphy was decided, no Michigan court had addressed this issue. Subsequent to that case, however, in a series of cases, the Michigan Court of Appeals has held that attorney fees are not recoverable as consequential damages. See Taylor v. Blue Cross/Blue Shield of Michigan, 205 Mich.App. 644, 657, 517 N.W.2d 864, 871 (1994); Swickard v. Wayne Co. Medical Examiner, 196 Mich.App. 98, 492 N.W.2d 497, 499 (1992); [*21] Dunn v. Emergency Physicians Medical Group, P.C., 189 Mich.App. 519, 473 N.W.2d 762, 764 (1991). For example, in Taylor, supra, a plaintiff brought suit against his insurance company claiming a bad-faith refusal to pay benefits under the contract. There, the Michigan Court of Appeals affirmed the trial court's denial of attorney fees as consequential damages, holding that, "[t]he general rule in Michigan prohibits an award of attorney fees as an element of cost or damages absent express authorization by statute, court rule, or other recognized exception." 205 Mich.App. at 657, 517 N.W.2d at 871. More recently, in Burnside v. State Farm and Cas. Co., 208 Mich.App. 422, 424, 528 N.W.2d 749, 750 (1995), the Michigan Court of Appeals expressly rejected the Sixth Circuit's holding in Murphy, supra, and held that, "application of the American rule precludes recovery of attorney fees incurred as a result of an insurer's bad-faith refusal to pay a claim." The Burnside court went on to state that, "[a]n insured's right to recover attorney fees as an element of damages is not triggered by the foreseeability of loss. Instead, attorney fees are recoverable only when expressly authorized by statute, [*22] court rule, or a recognized exception." 208 Mich.App. at 427, 528 N.W.2d at 751. 2 In actions under a federal court's diversity jurisdiction, "[w]hen a conflict exists between holdings of the Circuit and more recent determinations of state appellate courts, the interpretation of the Circuit is not binding on federal district courts." In re New York Asbestos Litig., 847 F. Supp. 1086, 1111 (S.D.N.Y. 1994); see also Medalie v. FSC Securities Corp., 87 F. Supp. 2d 1295, 1302 (S.D. Fl. 2000). In such a situation the federal court is directed to follow the outcome it believes the highest court of the state would follow. In re Asbestos Litig., 772 F. Supp. 1380, 1391 (E.D.N.Y. 1991), aff'd in relevant part, 971 F.2d 831 (2d Cir. 1992). The Sixth Circuit has held that if a state intermediate appeals court decision, "[is] squarely on point, we would be obliged to follow it unless 'convinced by other 2 This, of course, does not preclude the possibility of recovering attorney fees as sanctions for bad faith conduct at the conclusion of a federal action pursuant to Fed. R. Civ. P. 11 or 28 U.S.C. § 1927. 2010 U.S. Dist. LEXIS 36630, *18 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.192 Page 10 of 14 Page 7 of 7 David Dell persuasive data that the highest court of the state would decide otherwise.'" Wallace Hardware Co., Inc. v. Abrams, 223 F.3d 382, 396 (2000) [*23] quoting Ziebart Int'l Corp. v. Ins. Cos., 78 F.3d 245, 250-51 (6th Cir.1996). Unlike when Murphy, supra, was decided by the Sixth Circuit, there are now Michigan Court of Appeals decisions on point denying recovery of attorney fees. See Burnside, supra; Taylor, supra. Cromer argues that "[t]he Sixth Circuit got it right [in Murphy]" and asserts that, "this issue will be revisited by the current Michigan Supreme Court." [Cromer's Response Br. at 4.]. However, Cromer offers no evidence or case law in support of this proposition other than this naked assertion. Given that the Michigan Supreme Court has done nothing in nearly two decades to upset the Michigan Court of Appeals line of cases following the American Rule and holding attorney fees are not recoverable, the Court finds it unlikely that the Michigan Supreme Court will do so now. The conflict between the holdings of the Sixth Circuit and the Michigan Court of Appeals on the issue of attorney fees as consequential damages was addressed directly in City of Sterling Heights v. United Nat. Ins. Co., 2006 U.S. Dist. LEXIS 3038, 2006 WL 212030, (E.D. Mich. January 27, 2006), an unpublished opinion from this District. In that case, the court declined to follow the [*24] Sixth Circuit's holding in Murphy, supra, stating that, "[this] Court predicts that the Michigan Supreme Court will reach a similar conclusion [to that of the Michigan Court of Appeals]" and granted defendant's motion to dismiss as to the recovery of attorney fees under Michigan law as consequential damages in an insurance claim dispute. Id. at *9. This Court sees no reason to doubt the validity of the Michigan Court of Appeals decisions and predicts, just as the court did in City of Sterling Heights, supra, that the Michigan Supreme Court would reach a similar conclusion. Therefore, the Court finds that in this matter, Plaintiff has failed to state a claim for attorney fees as consequential damages upon which relief may be granted under Michigan law, and the claim, therefore, is dismissed. V. CONCLUSION For all the foregoing reasons, IT IS HEREBY ORDERED that Defendant's Motion for Partial Dismissal Pursuant to Fed. R. Civ. P. 12(b)(6) [Dkt # 8] is GRANTED. Accordingly, IT IS HEREBY FURTHER ORDERED that Plaintiff's claims of bad-faith handling and bad-faith adjustment of her insurance claim; violation of the Michigan Consumer Protection Act; intentional infliction of emotional distress [*25] due to intentional, tortious and torturous and extreme and outrageous behavior by Defendant; and, her claim for attorney fees as consequential damages are DISMISSED, WITH PREJUDICE. This case, therefore, will proceed only on Plaintiff's claim of breach of contract. SO ORDERED. /s/ Gerald E. Rosen Gerald E. Rosen Chief Judge, United States District Court Dated: April 14, 2010 End of Document 2010 U.S. Dist. LEXIS 36630, *22 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.193 Page 11 of 14 David Dell Cited As of: March 26, 2017 5:56 PM EDT WUMMEL Court of Appeals of Michigan April 20, 2004, Decided No. 247023 Reporter 2004 Mich. App. LEXIS 1011 *; 2004 WL 842439 BRADLEY T. WUMMEL and JOAN F. WUMMEL, Plaintiffs-Appellants, FIRST NATIONAL BANK OF AMERICA and MICHAEL GALBRETH, Defendants- Appellees. Notice: [*1] THIS IS AN UNPUBLISHED OPINION. IN ACCORDANCE WITH MICHIGAN COURT OF APPEALS RULES, UNPUBLISHED OPINIONS ARE NOT PRECEDENTIALLY BINDING UNDER THE RULES OF STARE DECISIS. Prior History: Otsego Circuit Court. LC No. 02- 009901-CZ. Disposition: Affirmed. Core Terms Mortgage, parties, construction project, summary disposition, plaintiffs', renegotiate, promissory Judges: Before: Bandstra, P.J., and Sawyer and Fitzgerald, JJ. Opinion PER CURIAM. Plaintiffs appeal as of right the order granting summary disposition in favor of defendants. We affirm. Plaintiff Bradley T. Wummel purchased a motel called the Sheridan Valley Resort in the early 1990s. In 1997, he decided to expand the motel by adding eight additional motel units, a pool, and a restaurant. Wummel negotiated a loan with defendant First National Bank of America (hereinafter "the bank") to finance the construction project. The initial loan was in the amount of $ 170,000 and was secured by a mortgage and promissory noted dated September 19, 1997, a commercial security agreement, and an assignment of rents. After obtaining the loan, Wummel began the construction project. By the fall of 1998 he realized that he would not be able to complete the project without borrowing additional funds. Wummel renegotiated his loan with defendant. The renegotiation involved increasing [*2] the loan amount by $ 70,000, to a total loan amount of $ 250,000, and was secured by a mortgage and promissory note dated October 27, 1998, a commercial security agreement, and an assignment of rents. After negotiating the second loan, Wummel continued the construction project. However, Wummel again underestimated the cost of the construction and approached the bank at the end of 2000 to renegotiate the loan. Wummel requested that the loan amount be increased from $ 250,000 to $ 390,000. The bank required additional collateral, and Wummel's mother, plaintiff Joan Wummel, mortgaged her home as collateral for the loan, and plaintiff mortgaged the motel property, a vacant lot, and a rental home. This loan was secured by mortgages and a promissory note dated January 3, 2001, a commercial security agreement, and an assignment of rents. Even with the additional amount he borrowed from the bank, Wummel was unable to complete his construction project. By March 2001, the proceeds of the loan were exhausted, and an additional $ 93,000 was needed to complete the project. Wummel attempted to renegotiate the loan a fourth time, claiming that at the time he closed on the January 2001 mortgage [*3] he was given verbal assurance from defendant Michael Galbreth, a loan officer at the bank and an agent of the bank, that the bank would loan him an additional $ 100,000 to complete the project. Galbreth and the bank denied that any verbal commitment to lend additional funds was made, noting that the value of the real estate securing the loan was only $ 385,000, and the bank would not Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.194 Page 12 of 14 Page 2 of 3 David Dell loan an additional $ 100,000 without an additional $ 100,000 in security. The bank received no payments after May 2001. Wummel allowed the insurance on the property to lapse, forcing the bank to purchase insurance on the property to protect its interests. Wummel also failed to provide financial information to the bank when requested. Both of these conditions are conditions of default under the terms of the mortgage and loan documents. The bank requested that Wummel cure the defaults, but plaintiff failed to do so. The bank commenced foreclosure proceedings against the mortgaged properties in June 2002. Wummel filed the present complaint alleging breach of fiduciary duty, breach of contract, misrepresentation, fraud, specific performance, and promissory estoppel. Wummel also sought, and was granted, a [*4] temporary restraining order. Wummel alleged that Galbreth advised Wummel that the bank would advance sufficient funds to complete the project and that more money would be available when and as needed to complete the project. Wummel also alleged that he "was repeatedly assured that the Bank was committed to completion of the project and that additional loan monies would be made available for that purpose." He alleged that there "were no limits on the amount the bank was willing to loan to complete the construction project." Essentially, Wummel alleged that defendants "reneged on their promise to finance Mr. Wummel's project to 100% completion." The bank filed a motion to set aside the TRO, grant summary disposition in favor of the bank, and allow the bank to proceed with the foreclosure. Defendants argued that plaintiffs' claims, which were based upon a business loan agreement, were strictly controlled by writings, specifically MCL 566.132(2). The trial court agreed and granted summary disposition in favor of the bank. Plaintiffs first argue that the trial court erred by refusing to consider parol evidence to determine the intent of the parties with regard [*5] to the amount of money that the bank was willing to lend. We disagree. The contract in this case contained a merger or integration clause that explicitly states the document represents the full and accurate agreement of the parties. This Mortgage, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Mortgage. No alteration or amendment to this Mortgage shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. In addition, the "Notice of Final Agreement" states in bold print near the top of the page: BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDING BY THE PARTIES. "The parol evidence rule operates to exclude evidence of prior contemporaneous agreements, whether oral or written, which contradict, vary or modify [*6] an unambiguous writing intended as a final and complete expression of the agreement. Where a binding agreement is integrated, it supersedes inconsistent terms of prior agreements and previous negotiations to the extent that it is inconsistent with them." Ditzik v Schaffer Lumber Co, 139 Mich. App. 81, 87-88; 360 N.W.2d 876 (1984). Parol evidence that does not vary or contradict the unambiguous terms of a written agreement is admissible. Wheelmakers, Inc v City of Flint, 47 Mich. App. 434, 439; 209 N.W.2d 444 (1973). Plaintiffs' claims were based on Galbreth's alleged verbal representation at the time Wummel closed on the January 2001 loan that the bank would loan whatever amount of money was necessary to complete the project. However, evidence of Galbreth's alleged verbal representations is not admissible to modify the parties' unambiguous and integrated written agreement that, "THE MAXIMUM PRINCIPAL AMOUNT OF THIS MORTGAGE EXCLUDING PROTECTIVE ADVANCES, IS $ 390,000." Ditzik, supra at 87-88. Plaintiffs contend that the mortgage is ambiguous because they believed that the term "protective advances" meant [*7] that the bank would loan whatever additional monies were necessary to complete the project. We disagree. The term "protective advances" is specifically defined in the mortgage: Protective Advance. The words "Protective Advance" mean an indebtedness or obligation that is secured by 2004 Mich. App. LEXIS 1011, *3 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.195 Page 13 of 14 Page 3 of 3 David Dell this Mortgage and that arises because Lender makes an expenditure or expenditures (1) to fulfill or perform an obligation of Grantor under this Mortgage, with respect to the premises, that Grantor has failed to fulfill or perform, (2) to preserve the priority of this Mortgage or the value of the premises, or (3) for reasonable attorneys' fees or other expenses that are incurred in exercising a right or remedy under this Mortgage or that Grantor has agreed in this Mortgage to reimburse to lender." This language is not ambiguous, and could not reasonably be interpreted to mean that a "protective advance" would include the loaning of additional principal beyond the maximum principal amount of $ 390,000 provided for in the mortgage. 1 [*8] The circuit court did not err by granting summary disposition of plaintiffs' claims. MCL 566.132(2) states in relevant part: An action shall not be brought against a financial institution to enforce any of the following promises or commitments of the financial institution unless the promise or commitment is in writing and signed with an authorized signature by the financial institution: (a) A promise or commitment to lend money, grant or extend credit, or make any other financial accommodation. (b) A promise or commitment to renew, extend, modify, or permit a delay in repayment or performance of a loan, extension of credit, or other financial accommodation. In Crown Park Technology Park v D & N Bank, 242 Mich. App. 538, 549-550; 619 N.W.2d 66 (2000), this Court held that MCL 566.132(2) is interpreted to preclude all actions for the enumerated promises and commitments: A party is precluded from bringing a claim - no matter its label against a financial institution to enforce the terms of an oral promise to waive a loan provision. . . . By not specifying what sort of "action" MCL 566.132(2) [*9] prohibits, we read this as an unqualified and broad ban. . . . This is consistent with interpreting MCL 566.132(2) to preclude all actions for the enumerated promises and commitments, including actions for promissory estoppel. 1 Further, given the prior renegotiations between the parties, it would not have been reasonable for plaintiffs to assume that the bank would loan an additional $ 100,000 without requiring additional security and a new mortgage. Given the applicability of the statute of frauds, MCL 566.132(2), to defendants' alleged promises of financial accommodation and plaintiffs' failure to meet the writing requirement contained therein, we find no error in the trial court's grant of summary disposition on plaintiffs' claims. Affirmed. /s/ Richard A. Bandstra /s/ David H. Sawyer /s/ E. Thomas Fitzgerald End of Document 2004 Mich. App. LEXIS 1011, *7 Case 1:17-cv-00262-GJQ-PJG ECF No. 5-7 filed 03/27/17 PageID.196 Page 14 of 14