UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

RICHARD AND LORELEI FRANK,

Plaintiff,

vs. Case No. 14-13518

MORTGAGE ELECTRONIC REGISTRATION HON. AVERN COHN 

SYSTEMS, INC., assigned to CHRISTIANA 

TRUST, a DIVISION OF WILMINGTON SAVINGS

FUND SOCIETY, FSB,

Defendants.

______________________________________/

MEMORANDUM AND ORDER

GRANTING DEFENDANT’S MOTION TO DISMISS (Doc. 3)

AND DISMISSING CASE

I. Introduction

This case challenges a foreclosure following default on a mortgage obligation. 

Plaintiffs Richard and Lorelei Frank are suing defendants Mortgage Electronic

Registration Systems, Inc. (MERS) and Christiana Trust, a division of Wilmington

Savings Fund Society, FSB (the Trust). Although foreclosure proceedings were

commenced, foreclosure has not yet taken place. 

The complaint alleges the following claims:

Count I - Wrongful Foreclosure

Count II - Breach of Contract

Count III - Fraudulent Misrepresentation

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Before the Court is defendants’ motion to dismiss on the grounds that the claims are

either barred by the statute of frauds, insufficiently plead, or otherwise fail to state a

plausible claim for relief. For the reasons that follow, the motion will be granted.

II. Background

On June 27, 2005, plaintiffs obtained a loan from Cranbrook Mortgage

Corporation in the amount of $139,447.00 to purchase real property located at 16899

Martin, Roseville, Michigan. Plaintiffs’ loan obligation is memorialized in a promissory

note. As security for the loan, plaintiffs granted MERS a mortgage “solely as nominee

for Cranbrook Mortgage Corporation.” On May 4, 2010, MERS assigned its interest in

the mortgage to BAC Home Loans Servicing, LP (BAC). On January 8, 2014, Bank of

America, N.A., successor by merger to BAC, assigned its interest in the mortgage to the

Trust. 

Plaintiffs defaulted under the terms of the mortgage by failing to make their loan

payments when due. Foreclosure proceedings were initiated.

While foreclosure proceedings were pending and one day prior to the scheduled

sheriff’s sale, plaintiffs filed a complaint in state court on August 14, 2014. As noted

above, the complaint is in three counts and in broad terms challenges defendants’ right

to foreclose.

On September 10, 2014, defendants removed the case to this court and later

filed the instant motion to dismiss.

III. Legal Standard

A motion to dismiss under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of a

complaint. To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual

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allegations must be enough to raise a right to relief above the speculative level on the

assumption that all of the allegations in the complaint are true." Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 545 (2007). See also Ass'n of Cleveland Fire Fighters v. City

of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). The court is "not bound to

accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). Moreover,

"[o]nly a complaint that states a plausible claim for relief survives a motion to dismiss." 

Id. at 679. Thus, "a court considering a motion to dismiss can choose to begin by

identifying pleadings that, because they are no more than conclusions, are not entitled

to the assumption of truth. While legal conclusions can provide the framework of a

complaint, they must be supported by factual allegations. When there are well-pleaded

factual allegations, a court should assume their veracity and then determine whether

they plausibly give rise to an entitlement to relief." Id. In sum, "[t]o survive a motion to

dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a

claim for relief that is plausible on its face." Id. at 678 (internal quotation marks and

citation omitted).

In ruling on a motion to dismiss, the Court may consider the complaint as well as

(1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of

which a court may properly take notice, (3) public documents, and (4) letter decisions of

government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor

Issues & Rights, Ltd., 551 U.S. 308 (2007). Here, the Court has considered documents

relating to the mortgage and the foreclosure which are referenced in the complaint and

central to plaintiffs’ claims. 

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IV. Analysis

Each count of the complaint will be addressed below.

A. Count I - wrongful foreclosure

Defendants contend that plaintiffs’ wrongful foreclosure claim should be

dismissed “for the simple reason that Plaintiffs’ Complaint is devoid of any factual

allegations of any kind illustrating what statute – if any – was violated, or how – if at all –

those unidentified statutes were violated.” The Court agrees.

Under Michigan law “[a]n eligible party can foreclose by advertisement when all

of these conditions are met:”

(1) the mortgagee has defaulted on a condition of the mortgage, triggering the

power to sell;

(2) no action has been instituted at law to recover the debt that the mortgage

secures;

(3) the mortgage with the power of sale has been recorded properly; and

(4) the foreclosing party is "either the owner of the indebtedness or of an interest

in the indebtedness secured by the mortgage or the servicing agent of the

mortgage.

M.C.L. § 600.3204(1). A foreclosing party is then required to provide notice of the

pending sale, including a calculation of the amount currently owed. See MCL 600.3208.

Plaintiffs’ wrongful foreclosure claim is alleged in the complaint as a “fail[ure] to

properly follow the requirements of the Foreclosure process set forth in MCL 600.3201,

et seq.” (Doc. 1, complaint at ¶ 23.) The complaint does not state with any degree of

particularity what any of the alleged violations are. The closest the complaint appears

to identify any wrongdoing is suggesting that the amount claimed to be due contained in

the foreclosure notice was somehow improper. (Id.) However, the complaint presents

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no facts or explanation for how the amount on the notice was improperly calculated,

why it is incorrect, or what the correct amount should have been. 

In their response, plaintiffs state that “MERS was not the proper party to

foreclose” on the property. Plaintiffs, however, offer no argument in support of this

assertion and the complaint contains no allegations to this effect. Moreover, the

Michigan Supreme Court has made clear that, under Michigan law, a mortgage granted

to MERS as nominee for lender and lender's successors and assigns, as was the case

here, is a valid and assignable mortgage. Residential Funding Co., LLC v. Saurman,

490 Mich. 909 (2011); see also Matthews v. Mortgage Electronic Registration Sys. Inc.,

No. 10–13740, 2011 WL 2560329 (E.D. Mich. Apr. 5, 2011). Under Saurman, MERS

can assign a mortgage, as it did here.1

The wrongful foreclosure claim is nothing more than the conclusory allegation

that defendants failed to follow the foreclosure process. This “formulaic recitation” fails

to meet the minimum pleading requirement. See Twombly, 550 U.S. at 555 (requiring

plaintiffs to allege “more than an unadorned, the-defendant-unlawfully-harmed-me

accusation.”).

Moreover, to the extent plaintiffs are alleging a violation of the loan modification

statute, such a claim fails. The complaint does not allege plaintiffs were entitled to a

1

Additionally, to the extent that plaintiffs contend that the “securitization” process

effectively split the mortgage from the note in breach of the mortgage, several courts

have rejected this argument. “[S]ecuritization does not impermissibly split the

promissory note and mortgage, nor does it invalidate the note or mortgage.”). Jones v.

Bank of America, No. 12-11608, 2012 U.S. Dist. LEXIS 158783, *8-9 (E.D. Mich. Nov.

6, 2012); Stafford v. Mortg. Elec. Regis. Sys., Inc., No. 12-10987, 2012 U.S. Dist. LEXIS

61413 at *13 (E.D. Mich. May 2, 2012) (citing cases). 

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loan modification; it rather alleges that they attempted, unsuccessfully, to obtain a loan

modification. Section 600.3205c does not require the Trust to modify any specific loan,

and it does not provide any basis for unwinding the foreclosure. Rather, the statute

provides a borrower with an opportunity to enjoin the sale and force the foreclosure to

be conducted under the judicial foreclosure process if the foreclosure is conducted in

violation of the statute. See M.C.L. § 600.3205c(8). 

Count I must be dismissed.

B. Count II - Breach of Contract

1.

Defendants argue that plaintiffs’ breach of contract claim under Count II should

be dismissed because it is insufficiently plead and barred by the statute of frauds. The

Court agrees.

To state a breach of contract claim under Michigan law, plaintiffs must plead that

“(1) that there was a contract, (2) that the other party breached the contract and, (3) that

the party asserting breach of contract suffered damages as a result of the breach.” 

Miller-Davis Co. v. Ahrens Const., Inc., 296 Mich. App. 56, 71 (2012).

The complaint falls short. The complaint alleges that the note and mortgage are

a contract but it does not set forth what terms of the note and mortgage were breached. 

Moreover, while the plaintiffs allege that the Trust (the complaint does not mention

MERS in this count) violated the “implied covenant of good faith and fair dealing,” this

fails to allege a plausible claim. “Michigan does not recognize a cause of action for

breach of the implied covenant of good faith and fair dealing.” Fodale v. Waste Mgmt.

of Mich., Inc., 271 Mich. App. 11, 35 (2006).

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To the extent plaintiffs claim that the Trust breached an obligation by not

modifying their loan, such a claim fails. Plaintiffs do not set forth any term in the note or

mortgage which obligates the Trust to modify their loan. Indeed, neither the note or

mortgage contains any term regarding loan modification. 

As a result, at best the complaint alleges allege that the Trust made an oral

promise to modify the loan. However, as defendants point out, because the Trust is a

financial institution,2

 Michigan law requires that any promise to modify the loan be in

writing or it is barred by the statute of frauds. The statute provides 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.

(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) (emphasis added). Michigan courts have applied section

2

A “‘financial institution’ means a state or national chartered bank, a state or

federal chartered savings bank or savings and loan association . . . or an affiliate or

subsidiary thereof [and] a person licensed or registered under the mortgage brokers,

lenders, and servicers licensing act . . .” M.C.L. § 566.132(3). The Trust is a federal

savings association, which is publically available information of which the Court can take

notice. See Mills v Equicredit Corp., 294 F. Supp. 2d 903, 910 (E.D. Mich. 2003) (taking

judicial notice of a lender’s status as a regulated entity in the context of a motion to

dismiss for failure to state a claim); see also Federal Savings Association List, available

at http://www.occ.gov/topics/licensing/national-bank-lists/thrifts-by-name-pdf.pdf

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566.132(2) in holding that any agreement 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. See Crown Technology Park v. D&N Bank, FSB, 242 Mich. App.

538, 549 (2000). See also Dingman v. OneWest Bank, FSB, 859 F. Supp. 2d 912, 919

(E.D. Mich. 2012) (allegations surrounding alleged promises of a loan modification

precluded). 

The complaint does not allege that the Trust made a promise in writing and the

promise was signed by an authorized agent of the Trust agreeing to modify the loan. 

Thus, the claim is barred by the statute of frauds.

2.

Plaintiffs’ response contains some additional details which they admit are not in

the complaint but appear to be directed at their breach of contract and fraud claims. 

Plaintiffs say that they brought money to a Bank of America which would have brought

their account current but the bank would not accept it because “their loan was under

review.” Plaintiffs also say that they “worked with” a counselor at “Michigan Sate

Extension Services” and were denied a loan because “their income was short $14 a

month.”3

 Even if these factual allegations were folded into the complaint, they do not

3

At the hearing, plaintiffs’ counsel submitted a letter from Trott & Trott, a law firm

apparently handling a possible loan modification and/or foreclosure proceedings. The

letter states in part: “Please be advised these calculations have been provided by your

Lender in regards to your Loan Modification request.” It goes on to list plaintiffs’

monthly income and expenses, resulting in a $14.07 monthly deficit. Plaintiffs’ counsel

argued that this letter demonstrates the unreasonableness of plaintiffs being denied a

loan modification. Putting aside that nowhere in the letter does it state that plaintiffs are

being denied a loan modification, as explained above, defendants are not obligated to

give plaintiffs a loan modification.

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establish a viable claim the Trust breached an agreement to modify plaintiffs’ loan. 

In the end, neither the complaint nor these additional details allege that the Trust

made a promise in writing, which was signed by an authorized agent, to modify

plaintiffs’ loan. Plaintiffs’ breach of contract claim must therefore be dismissed.

C. Count III - Fraudulent Misrepresentation 

Defendants say that this count must be dismissed because it is not plead with the

requisite particularity and is barred by the statute of frauds. Defendants are correct.

A claim sounding in fraud is subject to the heightened pleading requirements

under Fed. R. Civ. P. 9(b). Fed. R. Civ. P. 9(b) provides that "[iln alleging fraud or

mistake, a party must state with particularity the circumstances constituting fraud or

mistake. Fed. R. Civ. P. 9(b); see also Bender v. Southland Corp., 749 F.2d 1205, 1216

(6th Cir. 1984). In general, "[a] complaint is sufficient under Rule 9(b) if it alleges ‘the

time, place, and content of the alleged misrepresentation on which [the deceived party]

relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury

resulting from the fraud,' and enables defendants to ‘prepare an informed pleading

responsive to the specific allegations of fraud."‘ United States ex rel. Bledsoe v. Cmty.

Health Sys., Inc., 501 F.3d 493, 509 (6th Cir. 2007) (citations omitted). The purpose of

the additional pleading requirements of Rule 9(b) is to "provide defendants with a more

specific form of notice as to the particulars of their alleged misconduct." Brown v. Bank

of New York Mellon, 2011 WL 206124 at *3 (W.D. Mich. 2011). 

In order to state a claim for fraud, plaintiffs must plead: (1) that defendants made

a material misrepresentation; (2) that it was false; (3) that when they made it they knew

that it was false, or made it recklessly, without any knowledge of its truth, and as a

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positive assertion; (4) that they made it with the intention that it should be acted upon by

plaintiffs; (5) that plaintiffs acted in reliance upon it; and (6) that they thereby suffered

injury. Hi-Way Motor Co. v. Int’l Harvester Co., 398 Mich. 330, 336 (Mich. 1976). The

absence of any one of these elements is fatal to recovery. Under Rule 9(b), plaintiffs

“must at a minimum allege the time, place and contents of the misrepresentation(s)

upon which [they] relied.” 

Here, the complaint does not state what statements, who made them, when and

how they were made, and how plaintiffs relied on the statements. As discussed above

with respect to plaintiffs’ breach of contract claim, the additional statements in their

response - that they brought money to a Bank of America which was not accepted and

worked with a counselor at “Michigan Sate Extension Services” and being denied a loan

modification – do not make out a viable misrepresentation claim as they fail to fit within

the required elements. These additional details do not pertain to any action by the Trust

which would make out a viable fraud claim. 

Moreover, like plaintiffs’ breach of contract claim, any misrepresentation arising

out of an oral promise of a loan modification is barred by the statute of frauds as such

promises must be in writing. See Polidori v. Bank of Am., N.A., 977 F. Supp. 2d 754,

763 (E.D. Mich. 2013) (dismissing fraud claim based on an alleged oral promise to

modify a loan because the plaintiff “failed to plead facts or present evidence tending to

show that BANA signed a loan modification document embodying the oral promise

alleged.”). 

V. Conclusion

For the reasons stated above, the complaint does not plead plausible claims for

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relief arising out of the pending foreclosure proceedings. Defendants’ motion to dismiss

is GRANTED. This case is DISMISSED.

SO ORDERED.

 S/Avern Cohn 

AVERN COHN

UNITED STATES DISTRICT JUDGE

Dated: December 4, 2014

Detroit, Michigan

I hereby certify that a copy of the foregoing document was mailed to the attorneys of

record on this date, December 4, 2014, by electronic and/or ordinary mail.

S/Sakne Chami 

Case Manager, (313) 234-5160

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