UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

INAAM BASHI,

CIVIL ACTION NO. 09-12108

Plaintiff,

DISTRICT JUDGE DAVID W. LAWSON

v.

MAGISTRATE JUDGE DONALD A. SCHEER

WELLS FARGO HOME MORTGAGE,

INC., et al.,

Defendants.

_________________________________/ 

REPORT AND RECOMMENDATION

I. RECOMMENDATION:

I recommend that Plaintiff’s Motion for Temporary Restraining Order be denied.

II. REPORT:

A. Procedural History

Plaintiff originally filed this action in the Oakland County Circuit Court on May 18,

2009. The case was removed to this court by the Defendants on June 1, 2009. Defendant

Wells Fargo Home Mortgage, Inc. d/b/a America’s Servicing Company (“Wells Fargo”) filed

its Answer on June 9, 2009. The case was assigned to the undersigned magistrate judge

for general case management. A Scheduling Order was issued on June 11, 2009.

Plaintiff’s Motion to Temporary Restraining Order was filed on August 25, 2009.

Wells Fargo filed its Response on September 9, 2009. The motion was brought on for

hearing on September 10, 2009.

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B. Factual History

On December 23, 2005, Plaintiff closed two loans with Pathway Financial, LLC, a

non-party. The first loan was for $382,000.00 and the second was for $95,000.00. Both

loans were secured by real property located in Commerce Township, Michigan. Plaintiff’s

Complaint alleges that Defendants Wells Fargo and GMAC Mortgage Corporation

(“GMAC”) violated his rights under various federal and state statutes and common law.

Count IV of the Complaint alleges that “Defendants” provided false disclosures in

connection with the closing of the mortgage, in violation of the Federal Truth and Lending

Act (15 U.S.C. §§1601 et seq.). That claim is the sole basis asserted for the relief sought

in Plaintiff’s Motion for Temporary Restraining Order.

C. Analysis

In determining whether a preliminary injunction should issue, a court must consider

the following four factors: (1) whether the movant is likely to prevail on the merits; (2)

whether the movant would suffer an irreparable injury if the court does not grant a

preliminary injunction; (3) whether a preliminary injunction would cause substantial harm

to others; and (4) whether a preliminary injunction would be in the public interest.

Overstreet v. Lexington-Fayette Urban County Government, 305 F.3d 566, 573 (6th Cir.

2002). The moving party bears the burden of demonstrating entitlement to a preliminary

injunction.

Although no single factor is controlling when determining whether a preliminary

injunction should issue, the likelihood of success on the merits is often the predominant

consideration. Gonzales v. National Bd. Of Med. Exam’rs, 225 F.3d 620, 625 (6th Cir.

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2000) (“[A] finding that there is simply no likelihood of success on the merits is usually

fatal.”); Michigan State AFL-CIO v. Miller, 103 F.3d 1240, 1249 (6th Cir. 1997) (“while, as

a general matter, none of [the] four factors are given controlling weight, a preliminary

injunction issued where there is simply no likelihood of success on the merits must be

reversed.”). 

Plaintiff here has failed to demonstrate any likelihood of success on the merits. The

Complaint alleges that the first loan was with Defendant Wells Fargo. (Complaint,

Paragraph 11). The note and mortgage, however, reveal that the lender was Pathway

Financial, LLC. (Exhibits A and B to Defendant’s Brief in Opposition to Temporary

Restraining Order). There is no reference in the loan document which identifies Wells

Fargo as a party to the transaction. The balance of the Complaint contains no specific

reference to Wells Fargo. Rather, Plaintiff alleges that the “lender” prepared a uniform

residential loan application for Plaintiff which grossly exaggerated his income. Bashi further

alleges that “Defendants” intentionally misrepresented his income so that he would qualify

for the loan, and that Plaintiff “was promised” that the financing scheme was temporary,

and that he could sell the property or refinance the loans “if paying the monthly loan

payments became problematic.” (Complaint, Paragraphs 16-20). Thereafter, Bashi charges

that “Defendants” and other mortgage lenders, brokers and servicers, “systematically

inflated the supposed market values of properties throughout the mortgage market in order

to lend more money and sell the illbegotten mortgage loans on the mortgage-backed

securities (“MBS”) market.” “Defendants” allegedly made many loans to borrowers who

were unable to repay them, leading to artificially high mortgage loan amounts

disproportionate to the true market values of the secured real estate. 

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 Co-Defendant GMAC Mortgage has filed a Motion to Dismiss on these

grounds.

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Fed.R.Civ.P. 8(a)(2) provides that a pleading that states a claim must contain “a

short and plain statement of the claim showing that the pleader is entitled to relief . . ..” “A

plaintiff’s obligation to provide the ‘grounds’ of his entitle[ment] to relief’ requires more than

labels and conclusions, and a formulaic recitation of the elements of a cause of action will

not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). A plaintiff must “allege a

factual predicate concrete enough to warrant further proceedings.” Foundation for Interior

Design Educ. v. Savanna College of Art and Design, 244 F.3d 521, 530 (6th Cir. 2001).

Furthermore, Fed.R.Civ.P. 9(b) provides that a party alleging fraud “must state with

particularity the circumstances constituting fraud . . ..” The fraud claims asserted in the

instant Complaint are so broad and indefinite as to amount to nothing more than legal

conclusions. While Plaintiff alleges that Wells Fargo was the lender, the documents flatly

contradict that assertion. The Complaint asserts no facts whatever in support of the claim

that Wells Fargo undertook any act constituting a fraud or undermining real estate values.1

Plaintiff’s Count IV claims against Wells Fargo, which are the sole basis of his

Motion for Temporary Restraining Order, are even more questionable. Wells Fargo asserts

in its Response in Opposition to the Motion for Temporary Restraining Order that it did not

originate the loan. The documents memorializing the transaction confirm that fact. Wells

Fargo further maintains that it holds no interest in either of Plaintiff’s loans, but is “simply

the servicer of the first loan which has since been assigned to HSBC Bank USA, N.A., as

Trustee for Deutsche Alt-A Securities Mortgage Loan Trust, Series 2006-AR 3 (“HSBC”).

(Defendant’s Opposition Brief, Page 5). Plaintiff has offered no evidence to contradict

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Wells Fargo’s statements. At the hearing, counsel for Plaintiff was unable to offer a single

fact to support an inference that Wells Fargo was a party to the loan, or that it currently held

any beneficial interest in it. It should be noted that the assignee and current holder of the

note and mortgage, HSBC, is not a party to this action.

A “servicer” is not generally liable for recision or other

damages. While assignees of loans may be liable for “TILA”

violations, the statute draws a distinction between mere

servicers of loans and assignees. See 15 U.S.C. §1641(f)(1).

A servicer may be treated as an assignee only if the servicer

is or was the owner of the obligation. However, a servicer is

not treated as an owner on the “basis of an assignment of the

obligation from the creditor or other assignee to the servicer

solely for the administrative convenience of the servicer in

servicing the obligation.” 15 U.S.C. §1641(f)(2). “Servicing” is

defined as “receiving any scheduled periodic payment from a

borrower pursuant to the terms of any loan” and “making the

payments of principal and interest as may be required.” 12

U.S.C. §2605(2), (3) (cross referenced in 15 U.S.C.

§1641(f)(3)). 

Hubbard v. Ameriquest Mortgage Company, 624 F.Supp. 2nd 913 (N.D. Ill. 2008). I am

satisfied that Plaintiff has no valid TILA claim against Wells Fargo.

Even if the substantive provisions of the TILA could support a claim for relief against

this Defendant, the evidence would not appear to sustain it. Attached as Exhibits to

Defendant’s Brief in Opposition to the Motion for Temporary Restraining Order are the note,

mortgage, truth in lending disclosure statement and loan history for the mortgage in issue.

(Defendant’s Exhibits A-D, inclusive). The disclosure statement correctly states the annual

percentage rate and loan payment amounts to which Plaintiff agreed. It further advised

Plaintiff that the disclosed amounts did not include assessments for property taxes and

insurance. The mortgage which Plaintiff signed clearly stated his obligation to discharge

the payments of principal and interest on the loan amount, all taxes, assessments, charges,

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fines and impositions attributable to the property and the cost of insurance to protect the

property from fire and other hazards. At the hearing, counsel for Plaintiff was unable to

identify any erroneous or insufficient disclosure beyond the misstatement of the borrower’s

income in the loan application form. That form was signed by the Plaintiff, under the

penalties for perjury. Plaintiff certainly knew his true income, and could hardly have been

misled on that subject. Nothing revealed in the Complaint, Motion for Temporary

Restraining Order or Oral Argument supports the inference that Wells Fargo participated

in any way in bringing about his perjurious declaration. Plaintiff’s counsel based his entire

TILA claim upon Defendant’s alleged, and totally undefined “affiliation” with the mortgage

lender/broker. He expressed his hope that evidence to support the claim might be revealed

in discovery.

In presenting a pleading to a court, an attorney certifies that, to the best of his

knowledge, information and belief, formed after an inquiry reasonable under the

circumstances, the claims stated have evidentiary support. A reasonable inquiry in this

case would certainly have included a title search which would have revealed all parties and

assignees of the underlying mortgage debt. Neither the original lender nor any assignee

is named as a party in this case.

Plaintiff’s TILA claims suffer yet another defect. 15 U.S.C. §1640(e) requires that

any action for damages be brought within one year from the date of the occurrence of the

truth in lending violation. No basis for equitable tolling of that limitations period has been

asserted. 15 U.S.C. §1635(f) provides that an obligor’s right of recision shall expire three

years after the date of consummation of the transaction or sale of the property, whichever

occurs first. That limitation is not subject to equitable tolling. Beach v. Ocwen Fed. Bank,

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523 U.S. 410, 412 (1998). Plaintiff signed the note and mortgage at issue in this action on

December 23, 2005. His Complaint was originally filed in the state court on May 18, 2009.

His claims under TILA for recision and for damages are time barred. 

Plaintiff correctly asserts that irreparable harm may flow to him by reason of the sale

of his real estate. It is well settled that a plaintiff’s harm is not irreparable if it is fully

compensable by money damages. Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir.

1992). Because a piece of real property is unique, however, its loss has been considered

irreparable. See Sayo, Inc. v. Zions First National Bank, 2006 WL 3240706 (E.D. Mich).

While irreparable, the harm threatened to Plaintiff is not imminent. He may avoid the loss

of his property by exercising his right of redemption under the Michigan Foreclosure

Statute. Nonetheless, I consider that this factor favors the Plaintiff. 

The granting a Temporary Restraining Order would harm the economic interests of

the current holder of the note and mortgage, against whom Plaintiff has made no claim of

wrongdoing. It is reasonable to assume that economic loss would flow from Plaintiff’s

refusal/inability to pay the mortgage note and HSBC’s inability to execute on the collateral.

There is no basis upon which to conclude that HSBC or Wells Fargo should be required to

forego the legal remedies provided by state law. I find this factor to favor Defendant’s

position.

In my view, Plaintiff has not sustained the burden of establishing that the public

interest would be served by the issuance of a Temporary Restraining Order or injunction.

While there is a public benefit to widespread home ownership, the public benefits as well

from a stable, reliable and predictable system of creditors rights. I conclude that this factor

favors neither party.

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In balancing the four facts essential to the court’s decision, I find that the absence

of any meaningful prospect of recovery on Plaintiff’s underlying Complaint, and especially

upon his TILA claims, should be the predominant consideration. Accordingly, I recommend

that Plaintiff’s Motion for Temporary Restraining Order be denied.

III. NOTICE TO PARTIES REGARDING OBJECTIONS:

The parties to this action may object to and seek review of this Report and

Recommendation, but are required to act within ten (10) days of service of a copy hereof

as provided for in 28 U.S.C. Section 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 appeal. United States v.

Walters, 638 F.2d 947 (6th Cir. 1981), Thomas v. Arn, 474 U.S. 140 (1985), Howard v.

Secretary of HHS, 932 F.2d 505 (6th Cir. 1991). Filing of objections that raise some issues

but fail to raise others with specificity, will not preserve all the objections a party might have

to this Report and Recommendation. Smith v. Detroit Federation of Teachers Local 231,

829 F.2d 1370, 1373 (6th Cir. 1987), Willis v. Secretary of HHS, 931 F.2d 390, 401 (6th Cir.

1991). Pursuant to E.D. Mich. LR 72.1(d)(2), a copy of any objections is to be served upon

this Magistrate Judge.

Within ten (10) days of service of any objecting party's timely filed objections, the

opposing party may file a response. The response shall not be more than five (5) 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/Donald A. Scheer

DONALD A. SCHEER

UNITED STATES MAGISTRATE JUDGE

DATED: September 22, 2009

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CERTIFICATE OF SERVICE

I hereby certify on September 22, 2009, that I electronically filed the foregoing paper

with the Clerk of the Court sending notification of such filing to all counsel registered

electronically. I hereby certify that a copy of this paper was mailed to the following nonregistered ECF participants on September 22, 2009: None.

s/Michael E. Lang 

Deputy Clerk to 

Magistrate Judge Donald A. Scheer

(313) 234-5217

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