UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

GREGORY SHNELL,

Plaintiff,

v. Case No. 09-10216

WASHINGTON MUTUAL BANK, HONORABLE AVERN COHN

Defendant.

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MEMORANDUM AND ORDER

GRANTING DEFENDANT’S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT

I. Introduction

This is a case claiming defects in a foreclosure proceeding. Plaintiff Gregory

Shnell is suing defendant Washington Mutual Bank who held a mortgage on real

property owned by Shnell’s aunt. Although Shnell sued Washington Mutual Bank, the

real party in interest is JPMorgan Chase Bank (“Chase”), who purchased the assets of

Washington Mutual Bank, f/k/a Washington Mutual Bank, FA (“WaMu”), from the

Federal Deposit Insurance Corporation (“FDIC”), acting as receiver for WaMu.

Before the Court is Chase’s motion to dismiss or for summary judgment on all

counts of the complaint. For the reasons that follow, the motion will be granted.

II. Background

On September 3, 2004, Gertrude Krikorian obtained a $133,000.00 loan from

WaMu to refinance real property known as 4649 Jonathon Street, Dearborn, Michigan. 

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To secure the loan, Krikorian granted WaMu a mortgage on the property. Krikorian

signed both a note and mortgage documents. The mortgage, dated September 3,

2004, was recorded with the Wayne County Register of Deeds on October 4, 2004 in

Liber 41428, Page 646. Krikorian died on August 16, 2007. The property went into

default. Chase, who now owned the mortgage, scheduled a foreclosure sale which was

held on April 9, 2008. Chase purchased the property at the sale for $148,842.97. A

Sheriff’s Deed on Mortgage Sale (“Sheriff’s Deed”) was recorded with the Wayne

County Register of Deeds on April 22, 2008 in Liber 47183, Page 97. 

Shnell claims an interest in the property because three months after Krikorian’s

death, a quit claim deed was discovered which purported to convey Krikorian’s interest

in the property to Shnell. The quit claim deed was recorded on October 11, 2007 in

Liber 46719, Page 60. 

Shnell alleges that he contacted WaMu in hopes of purchasing the property

and/or obtaining a loan to extinguish the mortgage. WaMu did not respond to his

requests. 

On January 2, 2009, Shnell sued WaMu in state court, asserting the following

claims: 

Count I - quiet title

Count II - specific performance

Count III - predatory lending

Shnell says that he was not informed of the foreclosure sale and claims a superior 

interest in the property. He seeks to set aside the Sheriff’s sale, rescind the loan

agreement, and quiet title in his name only. He also seeks an unspecified amount of

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money damages. 

Chase removed the case to federal court on the grounds of diversity of

citizenship. Chase then filed the instant motion. 

III. Legal Standards

Chase moves to dismiss under Fed. R. Civ. P. 12(b)(6) and for summary

judgment under Fed. R. Civ. P. 56. A motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) tests the sufficiency of a complaint. To survive a Rule 12(b)(6)

motion to dismiss, the complaint's “factual 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. Twombley, 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.” Aschcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950 (internal

quotation marks and citation omitted). Moreover, “[o]nly a complaint that states a

plausible claim for relief survives a motion to dismiss.” Id. 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 1949 (internal quotation marks and citation omitted).

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Summary judgment will be granted when the moving party demonstrates that

there is “no genuine issue as to any material fact and that the moving party is entitled to

a judgment as a matter of law.” FED. R. CIV. P. 56(c). There is no genuine issue of

material fact when “the record taken as a whole could not lead a rational trier of fact to

find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 587 (1986).

The nonmoving party’s response “must set forth specific facts showing that there

is a genuine issue for trial.” FED. R. CIV. P. 56(e). Showing that there is some

metaphysical doubt as to the material facts is not enough; “the mere existence of a

scintilla of evidence” in support of the nonmoving party is not sufficient to show a

genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252

(1986). Rather, the nonmoving party must present “significant probative evidence” in

support of its opposition to the motion for summary judgment in order to defeat the

motion. See Moore v. Philip Morris Co., 8 F.3d 335, 340 (6th Cir. 1993); see also

Anderson, 477 U.S. at 249-50. Additionally, and significantly, “affidavits containing

mere conclusions have no probative value” in summary judgment proceedings. 

Bsharah v. Eltra Corp., 394 F.2d 502, 503 (6th Cir. 1968).

IV. Analysis

A. Count I - Quiet Title

In Count I, Shnell seeks to quiet title in the property. Chase says this claim fails. 

Under Michigan law, in an action to quiet title, the plaintiff has the burden of proof and

must make out a prima facie case of title. Stinebaugh v. Bristol, 132 Mich. App. 311,

316 (1984). If plaintiff makes out a prima facie case, the defendant then has the burden

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WaMu recorded the mortgage. However, because Chase has succeeded to all

of WaMu’s rights, it is appropriate to refer to Chase. 

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of proving superior right or title in themselves. Boekeloo v. Kuschinski, 117 Mich. App.

619, 629 (1982). Actions to quiet title are equitable in nature. Dobie v. Morrison, 227

Mich. App. 536, 538 (1998). Moreover, “[t]he Michigan Supreme Court has held that it

would require a strong case of fraud or irregularity, or some peculiar exigency, to

warrant setting a foreclosure sale aside.” United States v. Garno, 974 F. Supp. 628,

633 (E.D. Mich. 1997), citing Detroit Trust Co. v. Agozzinio, 280 Mich. 402, 405-06

(1937).

Chase says that Shnell cannot make out a prima facie case of title because

Chase has a superior interest in the property and Shnell had notice of that interest. The

Court agrees. “Michigan is a race-notice state, and owners of interests in land can

protect their interest by properly recording those interests.” Richards v. Tibaldi, 272

Mich. App. 522, 539 (2007). 

Here, Chase1 recorded its mortgage interest in the property on October 4, 2004. 

“The recordation of a mortgage constitutes constructive notice to all subsequent

lienholders regarding both the existence of the mortgage and the amount of

indebtedness that is secured.” Ameriquest Mortgage Co. v. Alton, 273 Mich. App. 84,

93 (2006)(citing McMurtry v. Smith, 320 Mich. 304, 306-07 (1948)). Thus, at the time

Shnell recorded the quit claim deed three years later, on October 11, 2007, he had

constructive notice of Chase’s interest. It is beyond dispute that Chase’s interest,

having been first recorded, is superior to Shnell’s. 

Moreover, even assuming Krikorian properly quit claimed her interest to Shnell,

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Chase’s lien was not extinguished. Michigan law is clear that “[a] properly recorded

mortgage is notice to all subsequent purchasers that they take subject to any lien the

mortgagor may have on the property whether the record has been examined or not. Id.

(citing Piech v. Beaty, 298 Mich. 535, 538 (1941)). When title passed from Krikorian to

Shnell, Chase’s mortgage was still attached. See Id. 

Finally, as Chase points out, Krikorian did not have the right to unilaterally

transfer title to Shnell. Under the terms of the mortgage, any transfer required Chase’s

written approval. See Mortgage, Section 18, page 13. In fact, Chase had the authority

to demand payment of the entire loan in the event the property was transferred without

its prior written approval. The mortgage states in part: “If all or any part of the Property

is sold or transferred . . . without Lender’s prior written consent, Lender may require

immediate payment in full or all sums secured by this Security Instrument.” Id. There is

nothing in the record to indicate Chase approved of the transfer to Shnell. 

Shnell, however, says that he has established a prima facie case for title

because the notice of the foreclosure and Sheriff’s sale was defective. Chase says that

notice was proper under Michigan law. The Court agrees with Chase.

Chase foreclosed by advertisement which is governed by statute. M.C.L. §

600.3208 provides the requirements for notice, as follows:

Notice that the mortgage will be foreclosed by a sale of the mortgaged premises,

or some part of them, shall be given by publishing the same for 4 successive

weeks at least once in each week, in a newspaper published in the county where

the premises included in the mortgage and intended to be sold, or some part of

them, are situated. If no newspaper is published in the county, the notice shall be

published in a newspaper published in an adjacent county. In every case within

15 days after the first publication of the notice, a true copy shall be posted in a

conspicuous place upon any part of the premises described in the notice.

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Here, Chase complied with the statutory requirements as evidenced by the

affidavits attached the Sheriff’s deed. Notice was published in the Detroit Legal News

for four weeks, on March 12, March 19, March 26 and April 2, 2008. 

While Shnell says that the notice was improper because the property contains

one residential home which is split into two units, the record shows that the property

described in the mortgage and the Sheriff’s deed are the same. In other words, the

mortgaged property was on the entire parcel, including both units. Chase was under no

obligation to pursue separate foreclosures for the two units contained in the same

residential home. See Sweet Air Inv., Inc. v. Kenny, 275 Mich. App. 492, 498 (2007). 

Moreover, because the front doors of the home are adjacent to each other, the posting

was clearly visible for both units.

Shnell’s argument that he was entitled to personal notice of the foreclosure is

also misguided. Putting aside that Shnell was not on the mortgage, “personal service is

not required by the statute; instead, publication in a newspaper for four consecutive

weeks and a posting of the foreclosure notice on the premises is all that is required.” 

Cheff v. Edwards, 203 Mich. App. 557, 561 (1994). 

Overall, Shnell has not, and cannot, make out a prima facie case for title. As

such, this claim must be dismissed.

B. Count II - Specific Performance

In Count II, Shnell demands “specific performance on the mortgage” because he

says he did not receive notice of the foreclosure. As stated above, Chase complied with

the required statutory notice provisions. Moreover, Shnell cannot obtain specific

performance of the mortgage because he is not a party to the mortgage–Chase and

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Krikorian were parties. In order to demand specific performance, there must be a

contract between the parties. Kopprasch v. Stone, 340 Mich. 384 (1954). Shnell is not

a party to a contract with Chase and therefore cannot seek specific performance. As

such, Count II must be dismissed.

C. Count III - Predatory Lending

In Count III, Shnell asserts a claim of predatory lending. Chase says that this

claim must be dismissed because Shnell lacks standing and because Michigan does not

recognize such a cause of action. In response, Shnell says that he does have standing

because of his interest in the property and predatory lending is a viable cause of action. 

Alternatively, Shnell seems to suggest that the claim should be converted to a claim for

fraud.

Chase’s position is well-taken. Michigan does not recognize a claim for

predatory lending. See Saleh v. Home Loan Services, Inc., 2009 WL 2496682 at *2 n. 1

(E.D. Mich. Aug.17, 2009); see also Beydoun v. Countrywide Home Loans, Inc., 2009

WL 1803198 at *4 (E.D.Mich. June 23, 2009) (assuming plaintiff brought his claim under

TILA or HOEPA because Michigan does not have a statute called “Predatory Lending.”). 

Shnell’s predatory lending claim must therefore be dismissed for failure to state a claim.

Moreover, Shnell does not have standing to assert such a claim. Nor does he

have standing to assert a fraud claim. “The irreducible constitutional minimum of

standing contains three elements.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560,

(1992). First, a plaintiff must show that he has suffered an “injury” in fact. Id. He must

have suffered “a harm that is both ‘concrete’ and ‘actual or imminent, not conjectural or

hypothetical.’ ” Vermont Agency of Natural Resources v. United States ex rel. Stevens,

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529 U.S. 765, 771 (2000), quoting, Whitmore v. Arkansas, 495 U.S. 149, 155 (1990).

Second, a plaintiff must establish a causal connection between the alleged injury and

the conduct of which he complains. Lujan, 504 U.S. at 560. That is, the injury must be

“fairly traceable” to the defendant's actions. Id. Third, a plaintiff must demonstrate that

the injury is redressable in this action. Vt. Agency, 529 U.S. at 771.

Here, Shnell was not a party to the mortgage between Chase and Krikorian. 

Shnell’s cannot bring a claim arising out of this transaction, whether it be predatory

lending or fraud. While Shnell says he was injured by the foreclosure, he lacks standing

to raise issues from a transaction to which he was not a party. Importantly, Shnell was

not responsible for paying the mortgage debt. See King v. IB Property Holdings

Acquisition, 635 F. Supp. 2d 651 (E.D. Mich. 2009) (in a case challenging a foreclosure,

the district court held that plaintiff lacked standing to assert claim under Fair Debt

Collection Practice Act on behalf of his father because plaintiff was not a party to the

mortgage and had no obligation to pay the debt).

Finally, as Chase points out, even assuming Shnell has standing to challenge the

mortgage transaction as being the product of fraud, the proper forum is in administrative

proceedings before the FDIC as receiver for WaMu. See Chase’s brief at p. 10 n.4. 

V. Conclusion

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For the reasons stated above, Chase’s motion is GRANTED. This case is

DISMISSED.

SO ORDERED.

 s/ Avern Cohn 

AVERN COHN

UNITED STATES DISTRICT JUDGE

Dated: December 8, 2009

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

record on this date, December 8, 2009, by electronic and/or ordinary mail.

 s/ Julie Owens 

Case Manager, (313) 234-5160

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