UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

DONNIE SIMS,

Plaintiff, No. 14-13381

v. District Judge Sean F. Cox

Magistrate Judge R. Steven Whalen

FEDERAL HOME LOAN MORTGAGE

CORPORATION and OCWEN LOAN

SERVICING, LLC,

Defendants.

 /

REPORT AND RECOMMENDATION

This is a mortgage foreclosure case. On August 15, 2014, Plaintiff Donnie Sims,

through counsel, filed a civil complaint in the Oakland County Circuit Court. On

September 2, 2014, Defendants Federal Home Loan Mortgage Corporation (“Freddie

Mac”) and Ocwen Loan Servicing, LLC (“Ocwen”) removed the case to this Court. 

Before the Court is Defendants’ Corrected Motion to Dismiss [Doc. #5], filed on October

10, 2014, which has been referred for a Report and Recommendation pursuant to 28

U.S.C. § 636(b)(1)(B). The Plaintiff has not filed a response. For the reasons discussed

below, I recommend that the Defendants’ motion be GRANTED and that the complaint

be DISMISSED WITH PREJUDICE.

I. FACTS

On October 22, 2007, the Plaintiff received a $99,900.00 loan from Shore

Mortgage for the purchase of real property in Southfield, Michigan. The loan was secured

by a mortgage granted to Mortgage Electronic Registration Systems, Inc. (“MERS”), as

nominee for Shore Mortgage. On or about November 14, 2012, MERS assigned the

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mortgage to GMAC Mortgage, LLC (“GMAC”), and on or about September 3, 2014,

GMAC assigned the mortgage to Ocwen.

Following the Plaintiff’s default, Ocwen commenced foreclosure by advertisement

proceedings, and on February 18, 2014, Freddie Mac purchased the property at a Sheriff’s

Sale. The statutory redemption period expired on August 18, 2014. The Plaintiff did not

redeem the property.

In his complaint, the Plaintiff brings claims of wrongful foreclosure (Count I),

breach of contract (Count II), and fraudulent misrepresentations (Count III). He asks that

the Sheriff’s Deed to Freddie Mac be set aside and that the matter proceed as a judicial

foreclosure.

II. STANDARD OF REVIEW

Fed.R.Civ.P. 12(b)(6) provides for dismissal of a complaint “for failure of the

pleading to state a claim upon which relief can be granted.” Rule 12(b) also provides that

if, on consideration of a motion under paragraph (6), “matters outside the pleadings are

presented to and not excluded by the court, the motion shall be treated as one for

summary judgment and disposed of as provided in Rule 56 (summary judgment).” In

assessing a Rule 12(b)(6) motion, the court accepts the plaintiff’s factual allegations as

true, and asks whether, as a matter of law, the plaintiff is entitled to legal relief. Rippy v.

Hattaway, 270 F.3d 416, 419 (6 Cir. 2001). th

The United States Supreme Court has modified the standard for determining

whether a complaint is subject to dismissal under Fed.R.Civ.P. 12(b)(6). In Bell Atlantic

Corp. v. Twombley, 550 U.S 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Court, 

construing the requirements of Fed.R.Civ.P. 8(a)(2), held that although a complaint need

not contain detailed factual allegations, its “[f]actual allegations must be enough to raise a

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right to relief above the speculative level...on the assumption that all the allegations in the

complaint are true.” Id., 127 S.Ct. at 1964-65 (internal citations and quotation marks

omitted). Further, “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.” Id. (Internal citations and quotation marks

omitted). See also Association of Cleveland Fire Fighters v. City of Cleveland, Ohio 502

F.3d 545, 548 (6 Cir. 2007). Stated differently, a complaint must “state a claim to relief th

that is plausible on its face.” Twombley, at 1974.

In Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the

Court explained and expanded on what it termed the “two-pronged approach” of

Twombley. First, it must be determined whether a complaint contains factual allegations,

as opposed to legal conclusions. “Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.” Id., 129 S.Ct. at 1949, citing

Twombley, 550 U.S. at 555. Second, the facts that are pled must show a “plausible” claim

for relief, which the Court described as follows:

“Determining whether a complaint states a plausible claim for relief will, as

the Court of Appeals observed, be a context-specific task that requires the

reviewing court to draw on its judicial experience and common sense. But

where the well-pleaded facts do not permit the court to infer more than the

mere possibility of misconduct, the complaint has alleged–but it has not

‘shown[n]”–‘that the pleader is entitled to relief.’” 129 S.Ct. at 1950

(Internal citations omitted).

III. DISCUSSION

The resolution of the Defendants’ motion hinges on whether the complaint

plausibly sets forth a claim that the foreclosure was defective. It does not.

Following the Sheriff’s Sale, the Plaintiff failed to redeem the property within the

six-month statutory redemption period, and therefore does not have standing to contest

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the foreclosure. In Michigan, the failure to redeem the property within the six-month

period following a foreclosure by advertisement divests the former owner of all rights to

the property. Piotrowski v. State Land Office Bd., 302 Mich. 179, 4 N.W.2d 514

(1942)(because “[p]laintiffs did not avail themselves of their right of redemption in the

foreclosure proceedings,” all “rights in and to the property were extinguished” at the end

of the foreclosure period). Id. at 187; M.C.L. § 600.3236 ; Conlin v. MERS, 714 F.3d 1

355, 359 (6 Cir. 2013)(citing Piotrowski). th

In exception to the general rule, “Michigan courts allow ‘an equitable extension of

the period to redeem from a statutory foreclosure sale in connection with a mortgage

foreclosed by advertisement and posting of notice’ in order to keep a plaintiff's suit

viable, provided he makes ‘a clear showing of fraud, or irregularity’ by the defendant.’”

El-Seblani v. IndyMac Mortg. Services, 2013 WL 69226, *3 (6 Cir. January 7, th

2013)(citing Schulthies v. Barron, 16 Mich.App. 246, 167 N.W.2d 784, 785 (1969));

Conlin at 359. “The standards for obtaining such an extension are stringent.” Id. In

Conlin, supra the Sixth Circuit, citing El-Seblani, stated:

“Whether the failure to make this showing [of fraud or irregularity] is best

classified as standing issue or as a merits determination, one thing is clear: a

plaintiff-mortgagor must meet this ‘high standard’ in order to have a

foreclosure set aside after the lapse of the statutory redemption period.”

The fraud must relate to the foreclosure proceeding itself. Conlin, supra.

M.C.L. § 600.3236 provides that with respect to a deed issued after foreclosure by 1

advertisement: 

Unless the premises described in such deed shall be redeemed within the time limited

for such redemption as hereinafter provided, such deed shall thereupon become

operative, and shall vest in the grantee therein named, his heirs or assigns, all the

right, title, and interest which the mortgagor had at the time of the execution of the

mortgage, or at any time thereafter....

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Plaintiff has not stated a plausible claim of fraud. A claim of fraud must allege the

following: “(1) That defendant made a material representation; (2) that it was false; (3)

that when he made it he knew that it was false, or made it recklessly, without any

knowledge of its truth, and as a positive assertion; (4) that he made it with the intention

that it should be acted upon by plaintiff; (5) that plaintiff acted in reliance upon it; and (6)

that he thereby suffered injury.” Hi-Way Motor Co. v. International Harvester Co., 398

Mich. 330, 336, 247 N.W.2d 813, 816 (1976). “The absence of any one” of these

elements “is fatal to a recovery.” Id. (Internal citations omitted). Further, a claim of

fraud “must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P.

9(b). The claimant must “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.” Coffey v. Foamex L.P., 2 F.3d

157, 161–62 (6th Cir.1993). “The Rule's purpose is to alert defendants ‘as to the

particulars of their alleged misconduct’ so that they may respond.” Kanouno v. SunTrust

Mortg., Inc., 2011 WL 5984023, *4 (E.D.Mich.2011)(Rosen, J.)(citing United States ex

rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 503 (6th Cir.2007)). 

At ¶ 22 of the complaint, the Plaintiff does specify some statements that he alleges

were false, including a representation by “the Servicer” that no foreclosure sale would

take place, and that consideration would be given to his loan modification requests, “even

after [f]oreclosure had commenced.” However, the Plaintiff does not identify who made

these statements, nor does he specify where and when these statements were made. These

omissions are “fatal to recovery.” Hi-Way Motor Co., supra.

Furthermore, the Plaintiff has not shown that he would have been prejudiced in the

foreclosure sale by any alleged fraud. In Kim v. JP Morgan Chase Bank, N.A., 493 Mich.

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98, 115, 825 N.W.2d 329 (2012), the Court held that to even show that a foreclosure is

void, “plaintiffs must show that they were prejudiced by defendant's failure to comply

with [M.C.L.] 600.3204. To demonstrate such prejudice, they must show that they would

have been in a better position to preserve their interest in the property absent defendant's

noncompliance with the statute.” In Conlin, 714 F.3d at 362, the Court noted as follows

regarding the requirement of prejudice:

“Even were the assignment from MERS to U.S. Bank invalid, thereby

creating a defect in the foreclosure process under § 600.3204(1)(d), Plaintiff

has not shown that he was prejudiced. He has not shown that he will be

subject to liability from anyone other than U.S. Bank; he has not shown that

he would have been in any better position to keep the property absent the

defect; and he has not shown that he has been prejudiced in any other way.”

Here, the Plaintiff defaulted on his promissory note. He would be in no better

position to keep his property notwithstanding any generalized claim of fraud in the

foreclosure proceeding.

Finally, the Plaintiff alleges a breach of contract claim premised on the theory that

“Investor and Servicer are subject to the implied covenant of good fait and fair dealing

imposed in every contract.” Complaint, ¶ 19. However, “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, 666 N.W.2d 271 (2003) citing Ulrich v.

Federal Land Bank of St. Paul, 192 Mich.App. 194, 197, 480 N.W.2d 910 (1991).

IV. CONCLUSION

For these reasons, I recommend the Defendants’ unopposed motion to dismiss

[Doc. #5] be GRANTED, and that the complaint be DISMISSED WITH PREJUDICE.

Any objections to this Report and Recommendation must be filed within 14 days

of service of a copy hereof as provided for in 28 U.S.C. §636(b)(1) and E.D. Mich. LR

72.1(d)(2). Failure to file specific objections constitutes a waiver of any further right of

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appeal. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Howard v.

Secretary of HHS, 932 F.2d 505 (6 Cir. 1991); United States v. Walters, 638 F.2d 947 th

(6 Cir. 1981). Filing of objections which raise some issues but fail to raise others with th

specificity will not preserve all the objections a party might have to this Report and

Recommendation. Willis v. Sullivan, 931 F.2d 390, 401 (6 Cir. 1991); Smith v. Detroit th

Fed’n of Teachers Local 231, 829 F.2d 1370, 1373 (6 Cir. 1987). Pursuant to E.D. th

Mich. LR 72.1(d)(2), a copy of any objections is to be served upon this Magistrate Judge.

Within 14 days of service of any objecting party’s timely filed objections, the

opposing party may file a response. The response shall be not more than twenty (20)

pages in length unless by motion and order such page limit is extended by the court. The

response shall address specifically, and in the same order raised, each issue contained

within the objections.

s/ R. Steven Whalen 

R. STEVEN WHALEN

UNITED STATES MAGISTRATE JUDGE

Dated: May 20, 2015

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing document was sent to parties of record

on May 20, 2015, electronically and/or by U.S. mail.

s/Carolyn M. Ciesla 

Case Manager to the

Honorable R. Steven Whalen

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