NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 14a0107n.06

No. 13-1436

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Before: BOGGS, MOORE, and McKEAGUE, Circuit Judges.

KAREN NELSON MOORE, Circuit Judge. The foreclosure crisis has taken a 

tremendous toll on our country. Numerous foreclosures have stalled the economy by impeding 

capital allocation and clouding title on real estate. The resulting court cases have flooded both 

state and federal courts, which must resolve these cases expeditiously in order to unwind the 

individual contractual tangles and, thus, help clean up the greater financial mess.

Gicu Rautu claims that when he purchased a home in January 2008, he was promised a 

fixed-rate mortgage. The documents he signed at closing, however, provided for an adjustablerate mortgage. Rautu claims that he has been harmed as a result of this alleged bait-and-switch. 

His complaint, however, failed to plead fraud with any particularity. The district court dismissed 

Rautu’s suit for this, as well as a number of other failings. For the reasons that follow, we 

AFFIRM that dismissal.

GICU RAUTU,

Plaintiff–Appellant,

v.

U.S. BANK,

Defendant–Appellee.

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ON APPEAL FROM THE

UNITED STATES DISTRICT

COURT FOR THE EASTERN

DISTRICT OF MICHIGAN

O P I N I O N
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I. BACKGROUND

Gicu Rautu purchased a home in Birmingham, Michigan, in January 2008. In order to 

finance his home purchase, Rautu obtained a mortgage from U.S. Bank through Indigo Financial 

Group. Rautu applied for a fixed-rate mortgage and claims that he was assured that the mortgage 

would indeed be a fixed-rate mortgage. When he was closing on the purchase and mortgage, 

however, Rautu signed mortgage documents for an adjustable-rate mortgage. Consequently, he 

claims to be a victim of a bait-and-switch fraud in which he received a product, an adjustablerate mortgage, for which he did not bargain. He also alleges that Indigo Financial Group 

benefitted financially from selling him an adjustable-rate mortgage rather than a mortgage with a 

fixed rate.

The adjustable-rate note provided for a 7.8% annual interest rate for the first five years of 

the thirty-year loan-repayment period. At the end of the first five years, in February 2013, the 

loan’s interest rate would effectively float between 7.8% and 13.8%. Rautu claims that he 

believed he was getting a 7.8% annual interest rate fixed for the entire period of his thirty-year 

loan. Accordingly, he professes to have been unaware that he was getting an adjustable-rate 

rather than a fixed-rate mortgage.

Rautu began falling behind on his payments in late 2010 and continued to struggle to 

make monthly payments in the beginning of 2011. In June 2011, Rautu and U.S. Bank entered 

into a Home Affordable Modification Program (“HAMP”) trial period. After successful 

completion of the trial period, Rautu and U.S. Bank executed a loan-modification agreement. 

While this agreement included a greater unpaid balance than Rautu’s original loan, the annual 

interest rate on this agreement was set at a fixed 4.8% for the duration of the loan. Under this 
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loan modification, Rautu made one payment in September 2011, but has made no subsequent 

payments.

Instead, Rautu filed suit against U.S. Bank in Oakland County, Michigan, Circuit Court 

on October 27, 2011. U.S. Bank removed the case to the United States District Court for the 

Eastern District of Michigan on February 21, 2012. By stipulation of the parties, that action was 

dismissed without prejudice on April 3, 2012.

Soon thereafter, Rautu filed the present action once again in Oakland County Circuit 

Court. The complaint, filed on May 31, 2012, raised six counts: (1) fraud and 

misrepresentation, (2) common-law rescission and/or reformation, (3) quiet title, (4) violation of 

the federal Truth in Lending Act (“TILA”) and Federal Reserve Regulation Z, (5) violation of 

the Credit Repair Organizations Act (“CROA”), and (6) violation of the Michigan Mortgage 

Brokers, Lenders, and Servicers Licensing Act. The first five counts were asserted against both 

Indigo Financial Group and U.S. Bank. The sixth count was asserted against only Indigo 

Financial Group, which the complaint identified as an “expired” corporation “no longer doing 

business.” R. 1 (Compl. Caption, ¶ 7) (Page ID #9). U.S. Bank removed the case to the United 

States District Court for the Eastern District of Michigan on July 6, 2012, with both federalquestion jurisdiction and diversity jurisdiction supporting the removal. U.S. Bank subsequently 

filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 

12(b)(6).
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On March 7, 2013, the district court granted the motion to dismiss.1 The district court 

provided a comprehensive opinion explaining its reasoning for dismissing each count. See R. 11 

(Op. & Order Granting Def.’s Mot. to Dismiss (“D. Ct. Op.”)) (Page ID #129–42). The district 

court dismissed Count 1 because Rautu “(i) failed to plead fraud with sufficient specificity, (ii) 

was unreasonable in relying on [U.S. Bank]’s alleged misrepresentations, and (iii) cannot 

demonstrate any harm arising from said misrepresentations.” Id. at 7 (Page ID #135). The 

district court ruled that, because rescission and reformation are equitable remedies rather than 

causes of action under Michigan law, Count 2 must be dismissed. Id. On Count 3, the quiet-title 

count, the district court ruled that Rautu’s failure to honor the loan agreement sullied Rautu’s 

hands. Consequently, Rautu is barred from entering a court of equity and asking for an equitable 

remedy due to his unclean hands. Id. at 7–8 (Page ID #135–36). According to the district court, 

the statute of limitations on any TILA or Regulation Z claim, Count 4, has long expired. Id. at 9 

(Page ID #137). Finally, the district court rejected Count 5, Rautu’s claim that U.S. Bank 

violated the CROA. Id. at 9–13 (Page ID #137–41). In doing so, the district court gave three 

independently sufficient reasons: (1) the CROA does not regulate entities such as U.S. Bank, (2) 

U.S. Bank did not make a misleading statement to a third party, and (3) the misleading statement 

was never actually made as Rautu alleges. Id.2

 

1On January 29, 2013, the district court had dismissed Indigo Financial Group from the 

suit without prejudice in a Stipulated Order. R. 9 (Stipulated Order of Dismissal as to Def. 

Indigo Fin. Grp., Only.) (Page ID #127). As a result, the district court dismissed the sixth count 

of the complaint, violation of the Michigan Mortgage Brokers, Lenders, and Servicers Licensing

Act. See R. 11 (Op. & Order Granting Def.’s Mot. to Dismiss (“D. Ct. Op.”) at 1–2) (Page ID 

#129–30). The parties do not dispute that the dismissal of this count was proper.

2

In his appeal, Rautu does not argue that the district court erred in dismissing Count 5. 

Consequently, our review will focus solely on Counts 1–4.
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On April 5, 2013, Rautu filed a notice of appeal. In his appeal, Rautu argues that the 

district court made four errors. First, he claims that his fraud claim should not have been 

dismissed because he pleaded fraud with sufficient particularity, reasonably relied on U.S. 

Bank’s misrepresentations, and was harmed. Second, he contends that the district court 

misconstrued Michigan law and that rescission and reformation are causes of action under

Michigan law, not simply remedies. Third, he contends that the district court’s application of the 

doctrine of unclean hands to bar him from pursuing equitable claims and remedies is overly 

broad. Finally, he claims that the statute of limitations has not run on his TILA claim, or, in the 

alternative, that the limitations period should be equitably tolled.

II. ANALYSIS

We review de novo a district court’s grant of a Rule 12(b)(6) motion to dismiss and its 

conclusion that any amendment would be futile. Seaton v. TripAdvisor LLC, 728 F.3d 592, 596 

(6th Cir. 2013). “To survive a motion to dismiss, a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 

(2007)). In ruling on a 12(b)(6) motion, courts must look only to the complaint and any 

documents that are referred to in the complaint and are central to the claim. Weiner v. Klais & 

Co., 108 F.3d 86, 88–89 (6th Cir. 1997).

A. Fraud and Misrepresentation

Federal Rule of Civil Procedure 9(b) requires that “[i]n alleging fraud . . ., a party must 

state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Rule 9(b) has 

been interpreted to require that a plaintiff, at a minimum, must provide “the time, place and 
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contents of the misrepresentation(s) upon which he relied.” Bender v. Southland Corp., 749 F.2d 

1205, 1216 (6th Cir. 1984). To assure that they have satisfied the Rule 9(b) requirements, 

plaintiffs should strive to specify the statement they contend is fraudulent, identify the speaker, 

time, and location of the statement, and explain why the statement is indeed untrue or a 

misrepresentation. See Frank v. Dana Corp., 547 F.3d 564, 570 (6th Cir. 2008).

Rautu’s complaint does not come close to meeting this standard because it lacks any 

detail regarding the alleged fraud or misrepresentation. Rautu, in his complaint, alleges that 

“Defendant’s representations, both verbal and through their [sic] disclosures, up to and through 

closing, made material representations to plaintiff regarding the nature of the loan. Defendant 

intended for plaintiff to rely upon the representations. These representations were false at the 

time, or made with reckless disregard as to their truth.” R. 1 (Compl. ¶¶ 17–19) (Page ID #10). 

This set of allegations says simply that the defendant3 made material misrepresentations to Rautu 

intending for Rautu to rely on them. It does not state when or where the misrepresentations were 

made. It simply states that they were made during the entirety of the relationship in forming the 

contract. It also does not state the content of the misrepresentations—any specific statement 

made by any individual or on any form that is false or misleading. The closest Rautu comes to 

providing U.S. Bank with any notice of the nature of the charges against it is by stating that 

“[t]hese representations changed the entire nature of the financing transaction.” Id. ¶ 20 (Page 

ID #10).

 

3Because Rautu sued both U.S. Bank and Indigo Financial Group, it is not even clear 

whether the fraud and misrepresentations are alleged to have been undertaken by one defendant, 

and, if so, which one, or by both defendants. The words “[d]efendant’s” and “defendant” are 

singular while “their” is plural.
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Relying on the general allegations in the complaint, a defendant may be able to figure out 

that this statement is intended to reflect that Rautu “applied for a fixed[-rate] loan,” id. ¶ 11 

(Page ID #9), but “was made the victim of a ‘bait and switch’ and placed in an Adjustable Rate 

Mortgage (“ARM”) without any prior knowledge.” Id. ¶ 14 (Page ID #9). While this may 

provide detail on the nature of Rautu’s theory of recovery, it lacks any detail on why Rautu 

expected to receive a fixed-rate loan. An adequate complaint would explicitly state which oral 

statements by representatives of the defendant or which written disclosures by the defendant led 

Rautu to believe that his loan would be a fixed-rate loan. Provided with the time, place, and 

contents of these statements, U.S. Bank would then have a fair opportunity to reply. Perhaps, 

U.S. Bank would answer that such statements were never made. Perhaps, it would argue that the 

statements were later repudiated. Perhaps, it would argue that the statements were not made with 

the intent that Rautu rely on them. U.S. Bank might even admit the truth of a statement. 

However, with the complaint as it is drafted, U.S. Bank simply has no concrete statements to

which it can reply. It has not been put on notice of the nature of the fraud it is alleged to have 

committed.

In effect, Rautu’s complaint states that he applied for one type of loan—a fixed-rate loan. 

He was then offered a different type of loan—an adjustable-rate loan. He signed the documents 

for the latter—perhaps without reading them—and, thus, he alleges that a bait-and-switch had 

occurred. This set of events may provide a cautionary tale for consumers to examine the loan 

documents they are signing—particularly for loans of over $400,000—but it does not state a 

claim for fraud or misrepresentation.
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Moreover, U.S. Bank in its motion to dismiss in the district court and in its brief before 

this appellate panel has pointed out this shortcoming of the complaint, and Rautu has shown no 

ability to correct it by providing the requisite detail. We conclude that Rautu is unable to remedy 

this failing, and we affirm the dismissal of Count 1 for failure to plead fraud with particularity.

The district court also dismissed Count 1 of the complaint for two other reasons: (1) it 

held that Rautu signed mortgage documents that clearly stated that he was getting an adjustablerate mortgage, and, thus, any reliance by him on previous promises that his mortgage would be 

for a fixed rate was unreasonable; and (2) it determined that Rautu suffered no damages because 

his annual interest rate never increased above the 7.8% fixed rate he was expecting to receive. 

Because we have found that the complaint fails to plead fraud with sufficient particularity, we 

have no reason to reach the district court’s other two bases for dismissing Count 1—lack of 

reasonable reliance and lack of harm.

B. Rescission and Reformation and Quiet Title

The district court, relying on Yaldu v. Bank of America Corp., 700 F. Supp. 2d 832, 847 

(E.D. Mich. 2010) (stating that “[r]escission and reformation are not separate causes of action; 

rather, they are equitable remedies”), dismissed Count 2 of Rautu’s complaint for failure to state 

a claim. R. 11 (D. Ct. Op. at 7) (Page ID #135). Rautu now argues that rescission and 

reformation are causes of action under Michigan law.

In Count 3, Rautu puts forward a quiet-title claim, requesting that the court use its 

equitable power to vindicate his rights. The district court determined that Rautu’s “failure to 

honor the terms of the loan agreement” sullied his hands. Id. at 8 (Page ID #136). 
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Consequently, the doctrine of unclean hands “bars [Rautu] from asserting a quiet-title action.” 

Id.

4

This panel does not have to interpret Michigan law to determine whether rescission and 

reformation are causes of action or merely equitable remedies because Rautu’s equitable 

claims—reformation and rescission and the quiet title cause of action—fail as causes of action. 

On both Count 2 and Count 3, Rautu requests that the court use its equitable power to change the 

relationship between himself and U.S. Bank with respect to the home and mortgage. His stated 

reason for why the court should take this action is because of the fraud and misrepresentation 

committed by U.S. Bank. See R. 1 (Compl. ¶ 24) (Page ID #10) (basing the rescission and 

reformation counts on the allegation that “[d]efendant materially misrepresented to plaintiffs 

(sic) the true nature of the financing”); id. ¶ 32 (Page ID #11) (arguing that the court should act 

on the quiet title claim because “defendants’ security interest in the home was obtained by fraud 

in the inducement”). Even Rautu’s opposition to the motion to dismiss clearly predicated any 

equitable remedy found in Count 2 or Count 3 on “the fraud committed by defendants, and 

request[ed] their respective types of equitable relief.” R. 5 (Pl.’s Resp. Opp’n Def.’s Mot. 

Dismiss 10) (Page ID #117). As we have noted above, however, Rautu fails to allege the nature 

of this fraud with sufficient particularity and does not provide any factual details on the 

substance of the misrepresentations, who made them, when and where they were made, or any 

 

4U.S. Bank made this argument in its motion to dismiss before the district court, and the 

district court accepted it. Rautu’s response to the motion to dismiss failed to address this 

argument. Having failed to address the doctrine of unclean hands below, he has forfeited the 

argument. See Dealer Computer Servs., Inc. v. Dub Herring Ford, 623 F.3d 348, 357 (6th Cir. 

2010).
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other salient facts. Consequently, Rautu’s complaint is inadequate to state a claim upon which 

relief may be granted. We affirm the district court’s dismissals of Count 2 and Count 3.

C. TILA Statute of Limitations

The district court dismissed Count 4 of Rautu’s complaint—violation of TILA—as being 

barred by TILA’s statute of limitations. R. 11 (D. Ct. Op. at 9) (Page ID #137). Indeed, “any 

action under [TILA] may be brought in any United States district court, or in any other court of 

competent jurisdiction, within one year from the date of the occurrence of the violation.” 15 

U.S.C. § 1640(e). The violation occurred at the time of the alleged bait-and-switch in January 

2008, but Rautu did not file his first suit until October 2011. Consequently, his suit is barred by 

the statute of limitations. See id. Today, Rautu argues that he filed suit within a year of 

discovering the violation and, alternatively, he asks for equitable tolling. However, Rautu has 

not alleged when he discovered that his loan agreement included an adjustable, rather than a 

fixed, rate. Moreover, he has not alleged what precluded him from discovering this fact from the

loan documents he signed. Finally, in his opposition to the motion to dismiss below, Rautu did 

not respond to U.S. Bank’s argument that his TILA claim was barred by the statute of 

limitations. Because in front of the district court Rautu did not argue for a later date of discovery 

of the TILA violation or that the statute of limitations should be equitably tolled, he has forfeited 

these arguments. See Dealer Computer Servs., Inc. v. Dub Herring Ford, 623 F.3d 348, 357 (6th 

Cir. 2010). We affirm the district court’s dismissal of Count 4.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the district court.