UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

MICHELLE HART,

Plaintiff,

v.

COUNTRYWIDE HOME LOANS, INC.,

Defendant.

 /

Case No. 09-12088

Honorable Patrick J. Duggan

OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR

SUMMARY JUDGMENT

 At a session of said Court, held in the U.S.

District Courthouse, Eastern District

of Michigan, on August 19, 2010.

PRESENT: THE HONORABLE PATRICK J. DUGGAN

U.S. DISTRICT COURT JUDGE

This action arises from the foreclosure of real property in the City of Southfield,

Michigan, owned by Plaintiff Michelle Hart (“Plaintiff”). In a Complaint filed on May 29,

2009, Plaintiff alleges that Defendant Countrywide Home Loans, Inc. (“Defendant”)

promised that it would review Plaintiff’s mortgage for modification when it had no intention

of assisting Plaintiff. Plaintiff asserts the following claims against Defendant based on its

alleged promise: (I) Misrepresentation; (II) Violation of the Housing and Economic Recovery

Act of 2008 (“HERA”); (III) Bad Faith; (IV) Violation of Defendant’s Contractual

Obligation to Modify Plaintiff’s Loan Pursuant to the Federal Home Affordable Modification

Program (“HAMP”) and the Emergency Economic Stabilization Act of 2008 (“EESA”); and

(V) Violation of the Michigan Attorney General Consent Agreement (“AGCA”) dated
1

Plaintiff alleges in her complaint and in response to the present motion that the sheriff’s

sale took place in August 2008. (Comp. ¶ 10; Resp. at 1.) However, documentary evidence

shows that the sale took place in 2007. (See Def.’s Mot. Ex. 6.)

2

October 6, 2008. Presently before the Court is Defendant’s motion for summary judgment

pursuant to Federal Rule of Civil Procedure 56(c), filed March 15, 2010. This motion has

been fully briefed and, on August 17, 2010, this Court heard oral arguments on this motion.

I. Factual and Procedural Background

On May 24, 2006, Plaintiff obtained a loan from Defendant to purchase a residence in

Southfield, Michigan, and granted a mortgage on the property to Defendant to secure the

loan. (Def.’s Mot. Exs. 1-2.) On the same day, Plaintiff obtained a second loan from

Defendant and granted a second mortgage on the property to Defendant as security for the

second loan. (Def.’s Mot. Exs. 3-4.)

Plaintiff subsequently defaulted on the terms of the first loan and stopped making

payments in August 2006. (Def.’s Mot. Ex. 5.) Around the same time, Plaintiff discussed her

financial situation and the arrearage with Defendant. Plaintiff was in contact with Defendant

regarding a forbearance or work-out plan in 2006, and again in 2007. (Pl.’s Dep. 29-31.)

However, Defendant informed Plaintiff that she did not qualify for a forbearance or a workout plan following the requests in 2006 and 2007. (Pl.’s Dep. 30-31.) Defendant then initiated

foreclosure proceedings by advertisement. (See Def.’s Mot. Ex. 6.)

A sheriff’s sale was held on July 17, 2007, where Mortgage Electronic Registration

Systems, Inc. (“MERS”), acting on behalf of Defendant, was the successful bidder.1

 (Id.) On

August 10, 2007, MERS quit claimed the property to The Bank of New York, as trustee.
3

(Def.’s Mot. Ex. 7.) Plaintiff’s six-month statutory redemption period expired January 17,

2008, at which point legal title to the property vested in the holder of the sheriff’s deed. See

Mich. Comp. Laws Ann. §§ 600.3236-.3240. Plaintiff later requested that Defendant modify

the loan on separate occasions in 2008 and 2009. (Pl.’s Dep. 27:14-21.) Defendant denied

the 2008 request and failed to respond in 2009. (Id.)

As previously indicated, Plaintiff filed this lawsuit on May 29, 2009, contending that,

by promising a review for modification with no intent to do so, Defendant made material

misrepresentations, violated the HERA, acted in bad faith, violated contractual obligations

to modify Plaintiff’s loan under the HAMP and the EESA, and failed to review Plaintiff’s

mortgage pursuant to the AGCA. Defendant seeks summary judgment as to all claims.

II. Standard for Summary Judgment

Summary judgment is appropriate if “the pleadings, the discovery and disclosure

materials on file, and any affidavits show there is no genuine issue as to any material fact and

that the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). At the

summary judgment stage, the inquiry “is whether the evidence presents a sufficient

disagreement to require submission to a jury or whether it is so one-sided that one party must

prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 243, 106 S. Ct.

2205, 2207 (1986). If a party fails to make a showing sufficient to establish an element

essential to that party's case, and that party bears the burden of proof at trial, then an entry

of summary judgment is required. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct.

2548, 2552 (1986).

Substantive law will identify which facts are material—disputed facts that are irrelevant
4

or unnecessary to the outcome will not preclude an entry of summary judgment. Liberty

Lobby, 477 U.S. at 248, 106 S. Ct. at 2510. Inferences to be drawn from the underlying facts

must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986). There is no

genuine issue when the record as a whole could not lead a rational trier of fact to find for the

nonmoving party. Id. Further, there must be something more than a “scintilla of evidence”

to demonstrate the existence of a genuine issue. See Liberty Lobby, 477 U.S. at 252, 106 S.

Ct. at 2512.

III. Plaintiff’s Interest in the Property

In its motion for summary judgment, Defendant contends that Plaintiff’s claims are

untimely because Plaintiff did not file her Complaint until at least 16 months after the

expiration of the statutory redemption period during which Plaintiff could have redeemed her

property from foreclosure. Defendant argues that since legal title to the property has vested

in the holder of the sheriff’s deed, Plaintiff has lost all interest in the property and any claim

to set aside the foreclosure or reform the mortgage is without merit and a legal impossibility.

Under Michigan law, legal title to a foreclosed property vests in the holder of the

sheriff’s deed unless the property is redeemed within the six-month statutory redemption

period. Mich. Comp. Laws Ann. § 600.3236-.3240. The redemption period and procedure

are “clearly spelled out” by statute, and the right to redemption generally “can neither be

enlarged nor abridged by the courts.” Gordon Grossman Bldg. Co. v. Elliott, 382 Mich. 596,

603, 171 N.W.2d 441, 444 (1969). Michigan law specifies foreclosure procedures, “leaving

no room for equitable considerations absent fraud, accident, or mistake.” Senters v. Ottawa
5

Sav. Bank, 443 Mich. 45, 55, 503 N.W.2d 639, 643 (1993). Since Plaintiff has not alleged

fraud, accident or mistake in the mortgage or in the foreclosure proceeding and also failed

to redeem the property, legal title to the property transferred to the holder of the sheriff’s

deed upon expiration of the redemption period.

A. Equitable Estoppel

Plaintiff nonetheless contends that Defendant “should be estopped pursuant to the

doctrine of equitable estoppels [sic] from raising the issue that the mortgage was post

sheriff’s sale or redemption given the affirmative conduct in representing to Plaintiff a

modification review would ensue.” (Resp. at 5.) Plaintiff asserts that she relied on

Defendant’s correspondence as a representation that Defendant would work with Plaintiff

to retain her home and that “Defendant cannot be allowed to unjustly place Plaintiff in a

position of reliance then arbitrarily change its position to Plaintiff’s detriment.” (Id.)

Equitable estoppel requires proof of: (1) an act, representation, admission, or omission

that intentionally or negligently induces another to believe certain facts exist, and (2) a

reliance on those facts to the detriment of the second party if the first party were to be

allowed to deny the existence of those facts. Lichon v. Am. Universal Ins., 435 Mich. 408,

415, 459 N.W.2d 288, 292 (1990). Plaintiff fails to satisfy both elements.

First, Plaintiff has not shown any act, representation, admission, or omission by

Defendant that induced Plaintiff to believe she would be offered a loan modification. Indeed,

Plaintiff admits that Defendant informed her that she did not qualify for a forbearance or loan

work-out plan in 2006 and 2007. (Pl.’s Dep. 30-31.) Additionally, Plaintiff states that she did

not request modification prior to 2008, that Defendant denied her modification request in
6

2008, and that Defendant never replied to her modification request in 2009. (Pl.’s Dep. 27.)

Accordingly, Plaintiff fails to show any behavior by Defendant that would induce reliance.

Second, Plaintiff fails to establish actual reliance on anything Defendant said or did.

Plaintiff cites Exhibit E of her Response as evidence that this Court should estop Defendant

from raising the expiration of the redemption period. Exhibit E consists of 11 email messages

between Plaintiff and Defendant dated May 29, 2009, to June 3, 2009, and one message from

Plaintiff to Defendant dated July 27, 2009. As such, none of the email correspondence

precedes the expiration of Plaintiff’s redemption period. For Plaintiff to have relied on any

act, representation, admission, or omission of Defendant to her detriment as related to the

expiration of the redemption period, the act, representation, admission, or omission by

Defendant must have occurred prior to the expiration of the redemption period. 

Furthermore, even if Plaintiff were to assert that Defendant somehow induced reliance

after the expiration of the redemption period, none of the emails contain an admission or

representation that could induce Plaintiff to believe she would receive a loan modification.

Of the 12 emails, only five are correspondence from Defendant to Plaintiff: the first email

confirms that Defendant delayed Plaintiff’s June 1, 2009, eviction pending a loan

modification review; the second confirms receipt of a fax sent by Plaintiff’s counsel; the third

instructs an employee of Defendant to contact Plaintiff; and the fourth and fifth are requests

by Defendant’s employee for Plaintiff to contact Defendant by telephone. Because Plaintiff

does not show that Defendant made an act, representation, admission, or omission to Plaintiff

regarding a loan alteration prior to the expiration of the redemption period, Defendant is not

estopped from raising the fact that Plaintiff’s legal title to the property was extinguished in
2

Section 1403 amends the Truth in Lending Act, 15 U.S.C. § 1601, by inserting Section

1639a titled “Duty of servicers of residential mortgages.”

7

January 2008.

B. Plaintiff’s Claims for Modification

The fact that Plaintiff’s redemption period expired before the filing of this lawsuit

impacts several of Plaintiff’s claims. Counts II and IV of the Complaint allege that Defendant

violated Section 1403 of the HERA2

 and, generally, the HAMP (collectively “Lending

Statutes”) by refusing to modify Plaintiff’s loan. Plaintiff asserts that under the Lending

Statutes, Defendant had a duty to modify Plaintiff’s loan. Because Plaintiff believes her loan

qualified for modification under the Lending Statutes and because Plaintiff believes that loan

modification is mandatory for qualified loans, Plaintiff contends Defendant was obligated

to modify Plaintiff’s loan and failed to do so. Plaintiff’s claims fail because the Lending

Statutes were enacted after Plaintiff lost legal title to the property and the statutes are not

applied retroactively. Furthermore, even if the Court assumes that Plaintiff’s mortgage was

eligible for modification under the Lending Statutes, Plaintiff’s claims fail because Plaintiff

misconstrues the Lending Statutes. The Lending Statutes do not impose a duty on Defendant

to modify every eligible mortgage and thus, even if Plaintiff had been eligible for loan

modification, her claims still fail. 

The HERA was enacted in July 2008 and the HAMP, part of the EESA, was enacted

in October 2008 – six and ten months, respectively, after legal title to the property vested in

the holder of the sheriff’s deed. Therefore, since the Lending Statutes were enacted after

Plaintiff’s redemption period expired, Plaintiff can only obtain relief if the Lending Statutes:
3

Plaintiff cites a Michigan Circuit Court case, Deutsche Bank National Trust Co. v. Hass,

for the proposition that the HAMP applies to properties past the redemption period at the time of

enactment. Plaintiff misconstrues Hass: the court in Hass merely held that a borrower remains

eligible for HAMP review so long as the HAMP was enacted before expiration of the redemption

period. Hass, No. 2009-2627-AV, slip. op. at 9 (Mich. 16th Cir. Ct. Sept. 30, 2009) (attached to

Pl.’s Resp. Ex. J) (“The Court is not convinced that a ruling in Appellants’ favor would amount

to a retroactive application of the law since the act became effective during Appellants’

redemption period and since they had also sought a loan modification during that time.”

(emphasis added)). The case does not address HAMP eligibility where the redemption period

expired before the HAMP’s enactment.

8

(1) are somehow applicable to Plaintiff currently, or apply retroactively; (2) impose a duty

on Defendant to modify all eligible loans; and (3) provide a private right of action for a

failure to satisfy that duty. None of these requirements are met.

First, the Supreme Court has said that “[t]he presumption against retroactive legislation

is deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our

Republic.” Landgraf v. USI Film Prods., 511 U.S. 244, 265, 114 S. Ct. 1483, 1497 (1994).

Since the Lending Statutes do not contain language indicating retroactive applicability, they

must be applied prospectively. As part of the HAMP program, loan servicers, including

Defendant, entered into Servicer Participation Agreements requiring participation in various

loan adjustment programs described in guidance issued by the Department of the Treasury.

(See Pl.’s Resp. Ex. A.) HAMP Supplemental Directive 09-01 indicates that “loans currently

in foreclosure are eligible [for modification].” (Resp. Ex. I.) The expiration of the redemption

period marked the end of foreclosure proceedings for Plaintiff’s property, however, rendering

Plaintiff’s mortgage ineligible. Therefore, because the Lending Statutes are not applied

retroactively and because the property’s foreclosure proceedings ended before enactment of

the Lending Statutes, Plaintiff’s now-terminated mortgage is not eligible for relief.3
9

Second, even if the Lending Statutes applied to Plaintiff’s mortgage, the statutes do not

compel Defendant to modify Plaintiff’s loan. The language of the HERA requires the

Secretary of the Treasury “to encourage the servicers of the underlying mortgages,

considering net present value to the taxpayer, to take advantage of the HOPE for

Homeowners Program.” 12 U.S.C. § 5219. While the Secretary must encourage mortgage

servicers to modify loans, the statute does not require Defendant or other mortgage servicers

to modify loans. See Escobedo v. Countrywide Home Loans, Inc., No. 09cv1557

BTM(BLM), 2009 WL 4981618, at *3 (S.D. Cal. Dec. 15, 2009) (“The Agreement does not

state that Countrywide must modify all mortgages that meet the eligibility requirements.”);

Williams v. Geithner, No. 09-1959 ADM/JJG, 2009 WL 3757380, at *6 (D. Minn. Nov. 9,

2009) (concluding that loans may be modified where appropriate and with discretion).

Therefore, even if Plaintiff were eligible for modification, there would be no duty imposed

on Defendant for which Plaintiff could seek relief.

Finally, assuming Plaintiff is eligible for modification (which she is not) and assuming

that the Lending Statutes impose a duty on Defendant to modify Plaintiff’s mortgage (which

they do not), the statutes do not create a private right of action under which Plaintiff may

seek relief. “There is no express or implied right to sue fund recipients . . . under TARP or

HAMP.” Aleem v. Bank of America, No. EDCV 09-01812-VAP (RZx), 2010 U.S. Dist.

LEXIS 11944, *12 (C.D. Cal. Feb. 9, 2010); see also Zendejas v. GMAC Wholesale

Mortgage Corp., No. 1:10-CV-00184 OWW GSA, 2010 WL 2490975 (E.D. Cal. June 16,

2010) (concluding that third-party beneficiaries cannot enforce government contracts “absent

a clear intent to the contrary,” and that HAMP expresses no such intent). Accordingly,
10

Plaintiff’s claims for modification under the Lending Statutes fail.

Plaintiff’s fifth claim fails for similar reasons. Count V alleges that by failing to modify

Plaintiff’s loan, Defendant violated a consent agreement between the Michigan Attorney

General and Defendant. Plaintiff argues that the AGCA should afford relief to Plaintiff even

though it was enacted 10 months after the expiration of her redemption period because in

Section 4.6(a) the AGCA states that “[t]he foreclosure process for a Qualifying Mortgage of

an Eligible Borrower will not be initiated or advanced for the period necessary to determine

such Eligible Borrowers’ interest in retaining ownership and ability to afford the revised

economic terms.” By the time Defendant entered into the AGCA, however, the foreclosure

process was entirely complete with respect to Plaintiff’s property. Therefore, no qualifying

mortgage existed to be modified. Furthermore, a consent agreement is interpreted as a

contract. See Rosen v. Tenn. Comm’r of Finance & Admin., 288 F.3d 918 (6th Cir. 2002).

Even if Plaintiff’s mortgage had not already ceased to exist at the time Defendant entered

into the AGCA, Plaintiff cannot enforce the terms of the contract as a non-party. Indeed, the

AGCA itself states at section 9.5, “This Agreement is not intended to confer upon any person

any rights or remedies, including rights as a third party beneficiary. This Agreement is not

intended to create a private right of action on the part of any person or entity other than the

parties hereto.” For these reasons, Defendant’s motion for summary judgment is granted as

to Counts II, IV, and V.

IV. Misrepresentation

In Count I of the Complaint, Plaintiff asserts that Defendant made material

misrepresentations by promising Plaintiff that her mortgage was being reviewed for
11

modification or other work-out arrangements when Defendant actually had no intention of

assisting Plaintiff. (Compl. ¶ 4.) Plaintiff also asserts that Defendant made the alleged

representations to Plaintiff so that Defendant could make a larger profit from foreclosing on

Plaintiff’s home, and that Defendant’s misrepresentations impaired Plaintiff’s efforts to retain

her home. (Id.) In its motion, Defendant argues that Plaintiff fails to allege actionable

misrepresentation and that any representation Plaintiff asserts relates to a future event, and

is therefore not actionable.

Under Michigan law, actionable fraud requires proof: 

(1) That defendant made a material representation; (2) that it was false; (3) that

when he made it he knew that it was false, or made it recklessly, without any

knowledge of its truth and as a positive assertion; (4) that he made it with the

intention that it should be acted upon by plaintiff; (5) that plaintiff acted in

reliance upon it; and (6) that he thereby suffered injury.

U.S. Fidelity and Guaranty Co. v. Black, 412 Mich. 99, 114, 313 N.W.2d 77, 82 (1981)

(quoting Hi-Way Motor Co. v. Int’l Harvester Co., 398 Mich. 330, 336, 247 N.W.2d 813,

816 (1976)). Additionally, “a promise regarding the future cannot form the basis of a

misrepresentation claim.” Forge v. Smith, 458 Mich. 198, 212, 580 N.W.2d 876, 884 (1998).

Plaintiff’s misrepresentation claim fails because Plaintiff has not shown that Defendant

made a material representation that was false. As previously explained, Plaintiff admits

Defendant reviewed Plaintiff’s requests for loan forbearance, work-out, or modification on

multiple occasions and never indicated that a modification would be granted. Also discussed

above, the email exchange reflected in Exhibit E of Plaintiff’s Response contains no

representations by Defendant. Since Defendant actually reviewed Plaintiff’s loan and

accurately informed Plaintiff of the outcome of her loan review, Defendant did exactly what
12

it said it would do, and therefore did not make a misrepresentation. Thus, Plaintiff fails to

meet the first two elements of a misrepresentation claim and Count I fails as a matter of law.

To the extent Plaintiff attempts to allege a claim based on a representation that

Defendant would review Plaintiff’s mortgage for modification with no intent to do so,

Plaintiff’s claim still fails because Defendant’s alleged statement would be a promise to

conduct a review in the future and cannot give rise to a viable misrepresentation claim.

Furthermore, reliance on a promise that Defendant would review Plaintiff’s mortgage for

modification could not cause an injury in this case where, as discussed in detail above,

Plaintiff is not entitled modification regardless of her eligibility under the Lending Statutes.

Therefore Defendant’s motion for summary judgment is granted as to Count I.

V. Bad Faith

Lastly, in Count III of the Complaint, Plaintiff asserts that Defendant owed a duty to

Plaintiff to act in good faith while servicing Plaintiff’s loan and that Defendant breached that

duty by “representing to Plaintiff modification efforts were being performed,” by failing to

modify Plaintiff’s loan, and by refusing to communicate with Plaintiff regarding other

options for Plaintiff’s mortgage. (Compl. ¶ 6.) In response, Defendant argues that, since

Defendant never represented that Plaintiff qualified for a modification, it is impossible for

Defendant to have acted in bad faith and that Plaintiff fails to establish an independent cause

of action for bad faith under Michigan law beyond the contractual dealings between the

parties. Plaintiff failed to respond to this argument.

The Michigan Supreme Court has held that “absent allegations and proof of tortious

conduct existing independent of [a breach of contract], exemplary damages may not be
13

awarded in common-law actions brought for breach of a commercial contract.” Kewin v.

Mass. Mutual Life Ins. Co., 409 Mich. 401, 420-21, 295 N.W.2d 50, 55 (1980). Additionally,

where a Plaintiff has “pleaded no more than defendant’s bad-faith failure to pay its

contractual obligation,” the pleading is “insufficient to establish an independent tort action.”

Isagholian v. Transamerica Ins. Corp., 208 Mich. App. 9, 17, 527 N.W.2d 13, 17 (1994). As

Plaintiff has presented nothing more than allegations of bad faith in connection with alleged

contractual obligations, Count III fails as a matter of law.

VI. Conclusion

After fully reviewing the evidence before the Court, it is clear that all of Plaintiff’s

claims fail as a matter of law. Although Plaintiff’s financial situation is the kind of

unfortunate circumstance the Lending Statutes were enacted to remedy, those statutes

provide no legal remedy to Plaintiff that this Court can enforce.

Accordingly, 

IT IS ORDERED that Defendant’s motion for summary judgment is GRANTED.

A judgment consistent with this opinion and order shall enter. 

s/ PATRICK J. DUGGAN

UNITED STATES DISTRICT JUDGE

Copy to:

Vanessa G. Fluker, Esq.

Courtney D. Roschek, Esq.

Martin S. Frenkel, Esq.