UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

ROSEMARIE E. ENGELS, et al., 

Plaintiffs,

v.

SETERUS, INC.,

Defendant.

Case No. 14-14006

SENIOR U.S. DISTRICT JUDGE

ARTHUR J. TARNOW

U.S. MAGISTRATE JUDGE 

MONA K. MAJZOUB

 /

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS [8]

Before theCourt is Defendant Seterus,Inc.’s Motion to Dismiss [8], Plaintiffs’

Response [9], and Defendant’s Reply [10]. For the reasons that follow, Defendant’s

Motion to Dismiss [8] is GRANTED in its entirety.

STATEMENT OF FACTS

This case involves a dispute over a $254,700.00 mortgage secured by

residential real estate commonly known as 41851 Alberta Drive, Sterling Heights,

Michigan 48314 (“the Property”).In 2005, Plaintiffs1 received a loan fromCambridge

Mortgage Company and granted a mortgage in favor of Mortgage Electronic

Registration Systems, Inc. (MERS) asthe lender’s nominee. On May 1, 2012, MERS

assigned the mortgage to the Federal National Mortgage Association (Fannie Mae).

Defendant is the servicer for Fannie Mae.

1

 Plaintiff Jeanne Riesterer has been deceased since July 7, 2012.

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On January 1, 2009, Plaintiffs and Defendant entered into a first loan

modification agreement. Subsequently, Plaintiffs defaulted on the loan under the

modified terms. On June 9, 2013, Plaintiffs and Defendant entered into a second loan

modification agreement. In March of 2014, Plaintiffs defaulted under the terms of the

second loan modification agreement by failing to make continuous and timely

payments. Defendant initiated foreclosure-by-advertisement proceedings in the middle

of 2014. The Sheriff’s sale occurred on January 16, 2015, after Defendant filed its

Motion to Dismiss [8].

STANDARD OF REVIEW

Defendant moves to dismiss Plaintiff’s Complaint pursuant to Federal Rule of

Civil Procedure 12(b)(6). Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of a complaint. To survive a motion to dismiss or for judgment on the

pleadings, a complaint must “state a claim to relief that is plausible on its face.” Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “While legal conclusions can

provide the framework of a complaint, they must be supported by factual allegations. 

When they are well-pleaded factual allegations, a court should assume their veracity

and then determine whether they plausibly give rise to an entitlement to relief.” 

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). 

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ANALYSIS

Plaintiffs allege claims for breach of Michigan Compiled Laws §§ 600.3208, 

600.3204, 600.3205, and the loan modification agreement. Plaintiffs also seek quiet

title specific performance, and other equitable relief.

When jurisdiction is based on diversity of citizenship as it is here, the Court

applies state law in accordance with the controlling decisions of the state supreme

court. Petroleum Enhancer, LLC v. Woodward, 690 F.3d 757 (6th Cir. 2012). The

Michigan legislature repealed Michigan Compiled Law § 600.3205 effective June 19,

2014. Accordingly, Plaintiffs’ claims under § 600.3205 in Count II are dismissed.

Defendant argues that Plaintiffs fail to state a claim under M.C.L. § 600.3208

in Count II because it published notice of the foreclosure sale for four consecutive

weeks in a local newspaper prior to the sale and posted a notice on a conspicuous

location on the Property within fifteen days of the first publishing.

Michigan law requires that 

[n]otice that [a] mortgage will be foreclosed by a sale of the

mortgaged premises, or some part of them, shall be given by

publishing the same for 4 successive weeks at least once in each

week, in a newspaper published in the county where the premises

included in the mortgage and intended to be sold, or some part of

them, are situated. If no newspaper is published in the county, the

notice shall be published in a newspaper published in an adjacent

county. In every case within 15 days after the first publication of the

notice, a true copy shall be posted in a conspicuous place upon any

part of the premises described in the notice.

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M.C.L. § 600.3208. Defendant submitted an affidavit from an employee of the

Macomb County Legal News that it published a notice of the foreclosure sale on

September 5, 12, 19, and 26, of 2014. [10-1]. Defendant also submitted an affidavit

by Mark Zobel that he securely posted a notice of the foreclosure sale at the Property

on September 8, 2014. Plaintiff does not submit any evidence to the contrary.

Defendant did not breach M.C.L. § 600.3208. 

Count III of Plaintiffs’ Complaint [1-2] alleges that Defendant breached the

loan modification agreement from December 20, 2008—the first loan modification

agreement. Defendant argues that Plaintiffs fail to state a claim that it breached the

first loan modification agreement because it was superceded by the second loan

modification agreement. Plaintiffs do not respond to this argument, but rather recite

general principles of contract law and refer to CitiMortgage, Inc., an entity that is

irrelevant to this case. The second loan modification agreement declared that any

instrument or document that “provide[s] for, implement[s], or relate[s] to, any change

or adjustment in the rate of interest payable under the Note” is “forever canceled, null

and void” as of June 9, 2013. As Plaintiffs declared the first loan modification

agreement null and void, they cannot not sue for breach thereof. 

Next, in Count V Plaintiffs allege that Defendant violated M.C.L. § 600.3204,

Michigan’s foreclosure by advertisement statute. Section 600.3204 states:

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(1) A party may foreclose a mortgage by advertisement if all of the

following circumstances exist: 

(a) A default in a condition of the mortgage has occurred, by

which the power to sell became operative. 

(b) An action or proceeding has not been instituted, at law, to

recover the debt secured by the mortgage or any part of the

mortgage or, if an action or proceeding has been instituted,

either the action or proceeding has been discontinued or an

execution on a judgment rendered in the action or proceeding

has been returned unsatisfied, in whole or in part. 

(c) The mortgage containing the power ofsale has been properly

recorded. 

(d) The party foreclosing the mortgage is either the owner of the

indebtedness or of an interest in the indebtednesssecured by the

mortgage or the servicing agent of the mortgage. 

(2) If a mortgage is given to secure the payment of money by

installments, each of the installments mentioned in the mortgage after

the first shall be treated as a separate and independent mortgage. The

mortgage for each of the installments may be foreclosed in the same

manner and with the same effect as if a separate mortgage were given

for each subsequent installment. A redemption of a sale by the

mortgagor hasthe same effect asif the sale for the installment had been

made upon an independent prior mortgage. 

(3) If the party foreclosing a mortgage by advertisement is not the

original mortgagee, a record chain of title must exist before the date of

sale under section 3216 evidencing the assignment of the mortgage to

the party foreclosing the mortgage.

In support of their allegations, Plaintiffs have submitted boilerplate language

containing unsupported legal conclusions that Defendant submitted affidavits that

have procedural defects. [1-2] at ¶ 36, 37. In contrast, Defendant has submitted

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documentation that Plaintiffs defaulted on the loan, that the mortgage delineating its

power of sale was properly recorded, and that its status as servicer of the mortgage

was properly recorded. Plaintiff has not alleged that Defendant instituted any legal

action to recover the indebtedness before foreclosing by advertisement. Defendant did

not violate M.C.L. § 600.3204.

As Plaintiffs have failed to state any claims, they are not entitled to any

equitable relief, including quiet title as recited in Count I, specific performance as

recited in Count IV, or injunction as recited in Count VI.

CONCLUSION

Accordingly, the Court being fully advised in the premises, 

IT IS ORDERED Defendant’s Motion to Dismiss [8] is GRANTED.

IT IS FURTHER ORDERED that Plaintiff’sComplaint is DISMISSED with

prejudice.

SO ORDERED.

THIS CASE IS CLOSED.

 s/Arthur J. Tarnow

 Arthur J. Tarnow

Dated: August 18, 2015 Senior United States District Judge

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