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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

STEPHEN KLOBUCAR and DIANE 

KLOBUCAR, 

Plaintiffs, 

v. 

BANK OF AMERICA, N.A., 

Defendant. 

Case No. 14-13917 

SENIOR U.S. DISTRICT JUDGE 

ARTHUR J. TARNOW

U.S. MAGISTRATE JUDGE 

R. STEVEN WHALEN

 / 

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [5] 

 Defendant filed a Motion to Dismiss [Doc. #5] on December 10, 2014. On 

March 2, 2015, after the parties’ settlement negotiations failed, the Court issued an 

Order [7] directing Plaintiffs to file a response to the motion by March 23, 2015. 

Plaintiffs filed their Response [8] on April 3, 2015. Defendant filed a Reply [9] on 

April 17, 2015. 

 For the reasons stated below, Defendant’s Motion to Dismiss [5] is 

GRANTED. 

FACTUAL BACKGROUND

 On November 18, 2002, Plaintiffs obtained a loan from Washington Mutual 

Bank, FA. The loan was evidenced by a note and secured by a mortgage on their 

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home. In May 2014, the Federal Deposit Insurance Corporation, acting as receiver 

for Washington Mutual Bank, assigned the mortgage to Chase. Chase promptly 

assigned the mortgage to Defendant Bank of America. 

 Plaintiffs defaulted on the loan. Prior to September 2014, they entered loan 

modification negotiations with Defendant. Plaintiffs allege that Defendant 

intentionally misled Plaintiffs into believing that loan modification was an option 

and that Defendant would not foreclose on their home while the negotiations 

continued. However, on September 1, 2014, Defendant commenced foreclosure by 

advertisement proceedings. Defendant published a notice of foreclosure on that 

date which stated that $261,783.41 remained due on the loan. 

 On September 8, 2014, Plaintiffs filed the instant suit in the Wayne County 

Circuit Court. Defendant removed the case to this Court on October 9, 2014. No 

sheriff’s sale had taken place as of the filing of the parties’ briefs on the instant 

motion. 

ANALYSIS

 Defendant moves to dismiss Plaintiffs’ complaint pursuant to Federal Rule 

of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be 

granted. To survive such a motion, the complaint must plead factual content that 

allows the court to draw a reasonable inference that the defendant is liable for the 

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misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court must 

accept the complaint’s factual allegations as true and draw all reasonable 

inferences in the plaintiffs’ favor. Ohio Police & Fire Pension Fund v. Standard 

& Poor’s Fin. Servs. LLC, 700 F.3d 829, 835 (6thCir. 2012). 

I. Wrongful Foreclosure 

 Plaintiffs claim in their complaint that Defendant “failed to properly follow 

the requirements of the Foreclosure process set forth in MCL 600.3201 et seq,

including, but not limited to, failing to properly calculate the amount claimed to be 

due on the date of the notice of foreclosure.” Defendant argues that Plaintiffs’ 

wrongful foreclosure claim is not ripe because no sheriff’s sale has occurred. It 

further argues that Plaintiffs have failed to plead their claim with sufficient 

specificity, since they failed to describe the miscalculation or identify any statutory 

provision Defendant violated. Plaintiffs do not respond to Defendant’s ripeness 

argument. Nor do they provide more detail about the alleged miscalculation. 

Instead, they assert that Defendant foreclosed upon their home despite misleading 

Plaintiffs into thinking that Defendant would not foreclose so long as their 

application for a loan modification remained pending. They argue that this deceit 

constitutes sufficient “fraud or irregularity” to set aside the sheriff’s sale—despite 

recognizing elsewhere in the brief that no sheriff’s sale had yet occurred. 

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 Under Michigan law, a plaintiff may set aside a foreclosure sale upon a 

showing of prejudice resulting from fraud or irregularity in the foreclosure 

procedure itself. Conlin v. Mortg. Elec. Registration System, Inc., 714 F.3d 355, 

359-60 (6th Cir. Mich. 2013). Allegations of fraud in loan modification 

negotiations, however, cannot qualify, since even negotiations held 

contemporaneously with foreclosure are distinct from the foreclosure procedure 

itself. Campbell v. Nationstar Mortg., --- F. App’x ---, 2015 WL 2084023, at *5 

(6th Cir. 2015) (citing Williams v. Pledged Prop. II, LLC, 508 F. App’x 465 (6th 

Cir. 2012)). Plaintiffs’ fraud argument therefore does not support their wrongful 

foreclosure claim. 

 Plaintiffs have forfeited any argument concerning the miscalculation alleged 

in their complaint, since they have made no attempt to develop it. E.g., Hayward 

v. Cleveland Clinic Found., 759 F.3d 601, 618 n.9 (6th Cir. 2014) (citing 

McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997)). Consequently, 

Plaintiffs’ wrongful foreclosure claim fails to state a claim upon which relief can 

be granted. 

II. Breach of Contract 

 Plaintiffs allege that Defendant breached the covenant of good faith and fair 

dealing implied in the parties’ mortgage contract by “[d]isingenuously negotiating 

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loss mitigation assistance” and “[m]isleading Plaintiffs about approval and 

extension of loss mitigation assistance as an alternative to foreclosure.” Defendant 

raises several arguments for dismissal of this claim, including that “Michigan does 

not recognize a claim for breach of an implied covenant of good faith and fair 

dealing.” Belle Isle Grill Corp. v. City of Detroit, 256 Mich. App. 463, 476 (Ct. 

App. Mich. 2003). However, “a more precise and accurate statement of the law is 

that Michigan does not recognize an independent tort action for breach of a 

contract’s implied covenant of good faith and fair dealing.” Bd. of Trustees of City 

of Birmingham Employees’ Ret. Sys. v. Comerica Bank, 767 F. Supp. 2d 793, 805 

(E.D. Mich. 2011). A party may sue for breach of contract under Michigan law to 

enforce the implied covenant of good faith and fair dealing that arises when the 

opposing party “makes its performance a matter of its own discretion.” Id. (citing 

Stephenson v. Allstate Ins. Co., 328 F.3d 822, 826 (6th Cir. 2003)). 

 Here, however, “Plaintiffs do not allege how Defendants made their 

performance a matter of their own discretion so as to give rise to the protections of 

an implied covenant of good faith and fair dealing.” Wheeler v. Long Beach 

Mortg. Co., No. 14-CV-14056, 2015 WL 1637619, at *4 (E.D. Mich. April 13, 

2015) (unpublished); see also Goodwin v. CitiMortgage, Inc., No. 1:12-CV-760, 

2013 WL 4499003, at *7 (E.D. Mich. Aug. 19, 2013) (dismissing good faith and 

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fair dealing claim where plaintiffs failed to identify contractual provision 

promising exercise of discretion in evaluating application for loan modification). 

Further, “Plaintiffs’ vague allegations of misrepresentations and disingenuous 

negotiations do not readily correspond to any term of the mortgage.” Wheeler, 

2015 WL 1637619, at *4. Plaintiffs therefore fail to state a breach of contract 

claim upon which relief can be granted. 

III. Fraudulent Misrepresentation 

 Plaintiffs allege that Defendant made false representations of fact, 

intentionally and successfully inducing Plaintiffs to forego challenging the 

foreclosure of their home. Defendant argues, inter alia, that Plaintiffs have not 

pled this claim with sufficient particularity. The Sixth Circuit has interpreted 

Federal Rule of Civil Procedure 9(b) to require a plaintiff raising a common law 

fraud claim to allege “the time, place, and content of the alleged misrepresentation 

on which he or she relied; the fraudulent scheme; the fraudulent intent of the 

defendants; and the injury resulting from the fraud.” Bennett v. MIS Corp., 607 

F.3d 1076, 1100 (6th Cir. 2010) (quoting Yuhasz v. Brush Wellman, Inc., 341 F.3d 

559, 563 (6th Cir. 2010)). Plaintiffs have not met this standard, since they “do not 

identify the content of the allegedly fraudulent statements, when they occurred, 

who made them, or where they were made.” Wheeler, 2015 WL 1637619, at *5. 

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They have therefore failed to state a fraudulent misrepresentation claim upon 

which relief can be granted. 

CONCLUSION

 For the reasons stated above, 

IT IS ORDERED that Defendant’s Motion to Dismiss [5] is GRANTED. 

SO ORDERED. 

s/Arthur J. Tarnow 

 Arthur J. Tarnow 

Dated: August 17, 2015 Senior United States District Judge 

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