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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WALTER W. LAWSON, JR., 

Plaintiff, 

v. 

WELLS FARGO BANK, N.A., 

Defendant. 

Case No. 15-11287 

SENIOR U.S. DISTRICT JUDGE 

ARTHUR J. TARNOW

U.S. MAGISTRATE JUDGE 

R. STEVEN WHALEN

 / 

ORDER GRANTING IN PART DEFENDANT’S MOTION TO DISMISS AND/OR FOR 

SUMMARY JUDGMENT [2] AND RESERVING DECISION ON DISMISSAL OF 

PLAINTIFF’S RESPA CLAIM PENDING HEARING

 Plaintiff filed this foreclosure challenge in state court on March 23, 2015.1

 

Defendant removed the action to this Court on April 6, 2015, and filed a Motion to 

Dismiss and/or for Summary Judgment [Dkt. #2] on April 14, 2015. On June 25, 

2015, Plaintiff filed a Response [6], to which Defendant filed a Reply [8] on July 9, 

2015. The Court finds the motion suitable for determination without a hearing, in 

accord with Local Rule 7.1(f)(2), with respect to the majority of Plaintiff’s claims. 

With respect to Plaintiff’s Real Estate Settlement Procedures Act (RESPA) claim, 

 

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 Plaintiff filed suit through attorney Steven Ruza. On July 23, 2015, this Court 

issued an Order [9] permitting Ruza to withdraw on the grounds that Michigan’s 

48th Judicial District Court had enjoined him from representing any client seeking 

to prevent a residential foreclosure or modify a home mortgage. Plaintiff has been 

represented by different counsel in responding to the instant motion. 

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however, the Court will reserve decision pending a hearing, to be scheduled after 

issuance of this Order. 

 For the reasons stated below, Defendant’s Motion to Dismiss [2] is 

GRANTED IN PART. 

FACTUAL BACKGROUND2

 In October 1992, Plaintiff obtained a loan secured by a mortgage on his home 

in New Boston, Michigan. The mortgage was later assigned to Defendant Wells 

Fargo Bank, N.A.. Plaintiff defaulted on his mortgage loan. On August 15, 2014, 

Plaintiff applied to Defendant for mortgage assistance. On September 15, 2014, 

Defendant requested additional information, which Plaintiff supplied. Shortly 

thereafter, an agent of Defendant told Plaintiff by phone that his application was 

complete. The agent said that a sheriff’s sale scheduled for September 25, 2014, 

would be postponed while Plaintiff’s application was evaluated. Nevertheless, the 

sheriff’s sale occurred as scheduled. Defendant did not grant Plaintiff any form of 

mortgage assistance. Plaintiff did not redeem the property prior to the expiration of 

the redemption period. 

ANALYSIS

 Defendant moves to dismiss Plaintiff’s claims pursuant to Federal Rule of Civil 

Procedure 12(b)(6). On a Rule 12(b)(6) motion to dismiss, the Court must “assume 

 

2

 The Court accepts Plaintiff’s allegations as true for the purposes of this Order. 

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the veracity of [the plaintiff’s] well-pleaded factual allegations and determine whether 

the plaintiff is entitled to legal relief as a matter of law.” McCormick v. Miami Univ., 

693 F.3d 654, 658 (6th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); 

Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993)). The Court holds that Defendant 

is entitled to dismissal under Rule 12(b)(6) of all of Plaintiff’s claims except his 

RESPA claim, which the Court reserves for decision after a hearing. The Court 

therefore need not decide the propriety of Defendant’s alternate motion for summary 

judgment under Federal Rule of Civil Procedure 56. 

I. RESPA 

 Plaintiff brings a RESPA claim, pursuant to 12 U.S.C. § 2605(f), for violations 

of 12 C.F.R. § 1024.41. He alleges, inter alia, that he submitted a complete loss 

mitigation application on August 15, 2014—41 days before the sheriff’s sale—and 

that Defendant did not evaluate the application and provide written notice of the 

denial within 30 days, as required by § 1024.41. His alleged damages include 

arrearage added to his mortgage loan, costs, and attorney fees. Judge Drain recently 

denied a Rule 12(b)(6) motion to dismiss with respect to a similar RESPA claim. See 

Austerberry v. Wells Fargo Home Mortgage, No. 15-cv-13297, 2015 WL 8031857, at 

*4-*7 (E.D. Mich. Dec. 7, 2015) (unpublished). The Austerberry decision was issued 

after the parties completed their briefing on the instant motion. The Court will reserve 

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decision on the motion with respect to Plaintiff’s RESPA claim pending a hearing, to 

be scheduled after issuance of this Order. 

II. Federal Mortgage Servicing Guidelines 

 Plaintiff alleges that Defendant violated 24 C.F.R. §§ 203.500, 203.501, and 

203.605 by failing to follow mortgage servicing guidelines established by the 

Department of Housing and Urban Development (HUD) and one of its components, 

the Federal Housing Administration (FHA). Plaintiff has no private right of action to 

enforce these guidelines. Fed. Nat’l Mortg. Ass’n v. LeCrone, 868 F.2d 190, 193 (6th 

Cir. 1989) (“[N]o express or implied right of action in favor of the mortgagor exists 

for violation of HUD mortgage servicing policies.”) (citing United States v. Neustadt, 

366 U.S. 696, 709 (1961)); Baumgartner v. Wells Fargo Bank, N.A., No. 11–cv–

14065, 2012 WL 2223154, at *4 (E.D. Mich. June 15, 2012) (unpublished) (“A failure 

of a mortgagee to adhere to the HUD servicing requirements in the regulations can be 

an affirmative defense to foreclosure, but does not form the basis for a claim.”) 

(quoting Wells Fargo Bank, NA v. Favino, No. 10–cv–571, 2011 WL 1256771 (N.D. 

Ohio 2011)). This claim is therefore dismissed. 

III. Wrongful foreclosure under state law 

 In Count One, Plaintiff challenges the foreclosure on the basis of Defendant’s 

failure to properly evaluate his request for a loan modification. In Count Five, 

Plaintiff alleges that Defendant failed to comply with requirements of Michigan 

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Compiled Laws § 600.320 et seq., including proper calculation of the amount due and 

proper posting of notice. 

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

showing of prejudice resulting from fraud or irregularity in the foreclosure 

proceeding. Conlin v. Mortg. Elec. Registration System, Inc., 714 F.3d 355, 359-60 

(6th Cir. Mich. 2013). “An alleged irregularity in the loan modification process, 

however, does not constitute an irregularity in the foreclosure proceeding.” Campbell 

v. Nationstar Mortg., 611 F. App’x 288, 294 (6th Cir. 2015) (citing Williams v. 

Pledged Prop. II, LLC, 508 F. App’x 465, 468 (6th Cir. 2012)). Plaintiff’s foreclosure 

challenge based on Defendant’s evaluation of his loan modification request therefore 

fails. Plaintiff has forfeited any argument concerning his allegations of a 

miscalculation of amount due and improper posting of notice, since he has made no 

attempt to develop such an argument beyond the bare assertions of his complaint. 

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)). Accordingly, 

Counts One and Five are dismissed. 

IV. Negligence

 Plaintiff brings a negligence claim premised on Defendant’s failure to evaluate 

Plaintiff’s application for a loan modification pursuant to the requirements of the 

federal Home Affordable Modification Program (HAMP). “[T]he Sixth Circuit has 

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explicitly rejected similar claims, finding that lenders have no duty of care to evaluate 

loan modification applications under HAMP in Michigan.” Austerberry, 2015 WL 

8031857, at *8 (citing Rush v. Mac, 792 F.3d 600, 605 (6th Cir. 2015)). Plaintiff’s 

negligence claim is therefore dismissed. 

V. Breach of contract 

 Plaintiff alleges that Defendant breached the covenant of good faith and fair 

dealing implied in the parties’ mortgage contract. “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). However, 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, Plaintiff does not allege how Defendant “made [its] performance a matter 

of [its] 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) (unpublished) (dismissing good faith and fair dealing claim 

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where plaintiffs failed to identify contractual provision promising exercise of 

discretion in evaluating application for loan modification); Austerberry, 2015 WL 

8031857, at *8. The breach of contract claim is therefore dismissed. 

VI. Fraudulent misrepresentation 

 Plaintiff alleges 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 Plaintiff has not pled his fraudulent 

misrepresentation 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)). Plaintiff relies on the allegations in paragraph 56 of his Complaint, which 

identifies Defendant’s misrepresentations as follows: 

a. Erroneously stating in response to Plaintiff’s complete loss mitigation 

request that it would properly evaluate Plaintiff’s request .... 

b. Leading Plaintiff to believe that he would qualify for loss mitigation 

options; 

c. Falsely stating to Plaintiff that no foreclosure would take place during 

negotiations until Plaintiff’s request had been reviewed for all home 

retention options. 

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These allegations do not meet the particularity 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. Plaintiff has 

therefore failed to state a fraudulent misrepresentation claim upon which relief can be 

granted. The claim is dismissed. 

CONCLUSION

 For the reasons stated above, 

IT IS ORDERED that Defendant’s Motion to Dismiss and/or for Summary 

Judgment [2] is GRANTED IN PART. Plaintiff’s claims, with the exception of his 

RESPA claim, are DISMISSED. The Court will schedule a hearing on Defendant’s 

motion with respect to Plaintiff’s RESPA claim after issuance of this Order. 

SO ORDERED. 

s/Arthur J. Tarnow 

 Arthur J. Tarnow 

Dated: January 22, 2016 Senior United States District Judge 

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