Bell v. Cameron-Hall, Case No. 14-cv-11486

HUBERT BELL, Plaintiff, v. DOROTHY CAMERON-HALL, US BANK NATIONAL ASSOCIATIONFIRST FRANKLIN MORTGAGE LOAN TRUST, Defendants.

Case No. 14-cv-11486

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

July 31, 2015

Honorable Laurie J. Michelson

Magistrate Judge Michael J. Hluchaniuk

OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS [10]

Plaintiff Hubert Bell filed this lawsuit after Defendant U.S. Bank National Association, as trustee for the holders of the First Franklin Mortgage Loan Trust ("Trustee" or "Defendant"), foreclosed on a property he was renting from Defendant Dorothy Cameron-Hall. After removing the case from state court, the Trustee filed a motion for judgment on the pleadings. Defendant Hall has not yet been served, but the Trustee's motion is fully briefed and the matter is now ready for disposition. Having carefully reviewed the briefing, the Court finds that oral argument will not aid in resolving the pending motion. See E.D. Mich. LR 7.1(f)(2). The Court finds that Bell's four-count complaint fails to state a claim on which relief can be granted. Accordingly, the Court will DISMISS Bell's claims against the Trustee.

I. LEGAL STANDARD

"When deciding a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), the Court applies the same legal standard as it would for a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted." Brody v. Genpact Servs.,LLC, 980 F. Supp. 2d 817, 819 (E.D. Mich. 2013) (citing Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2010)). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff "must allege 'enough facts to state a claim of relief that is plausible on its face.'" Traverse Bay Area Int. Sch. Dist. v. Mich. Dep't of Educ., 615 F.3d 622, 627 (6th Cir. 2010) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility means that "the complaint has to 'plead[] factual content that allows the court to draw the reasonable inference that the defendant[s are] liable for the misconduct alleged.'" Ohio Police & Fire Pension Fund v. Std. & Poor's Fin. Servs., LLC, 700 F.3d 829, 835 (6th Cir. 2012) (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "This standard does not require detailed factual allegations, but a complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient." HDC, LLC v. City of Ann Arbor, 675 F.3d 608, 614 (6th Cir. 2012) (citation and internal quotation marks omitted).

The court must "accept all well-pleaded factual allegations as true and construe the complaint in the light most favorable to plaintiffs." Bennet v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir. 2010). The court "need not, however, accept unwarranted factual inferences." Id. (citing Twombly, 550 U.S. at 570). Nor are "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements" entitled to an assumption of truth. Iqbal, 556 U.S. at 678. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).

II. ALLEGATIONS OF THE COMPLAINT

Plaintiff Hubert Bell rented a house at 24266 Konarska Drive in Brownstown, Michigan ("Property"). (Dkt. 1-2, Compl. at ¶ 5.) Defendant Dorothy Cameron-Hall owned the Property,and had secured a loan for the $248,000 purchase price with a mortgage through First Franklin, A Division of National City Bank of Indiana. (Dkt. 10-1, Mortgage.) The mortgage was recorded on September 26, 2005 in Wayne County, Michigan. (Id.) On August 3, 2009, First Franklin assigned the Mortgage to Defendant US Bank National Association as Trustee. (Dkt. 10-2, Assignment.) The Assignment was recorded on August 10, 2009 in Wayne County. (Id.)

Hall defaulted on the mortgage and the Trustee initiated foreclosure-by-advertisement proceedings. A sheriff's sale was held on September 19, 2013, and the Trustee purchased the Property for $270,819.17. (Dkt. 10-3, Sheriff's Deed.) The redemption period was set to expire on March 19, 2014. (Id.) Bell became aware of the foreclosure and Sheriff's sale on or about February 27, 2014. (Compl. at ¶ 6.) Concerned about his interactions with the Trustee and desiring to preserve his alleged rights under the lease, he filed this suit.

Bell attached his lease to his Complaint. (Compl. Ex. 2.) The lease term runs from July 15, 2013 through July 15, 2016. (Compl. at 1.) In the Complaint, Bell alleges that the lease gave him the option to purchase the Property. (Id. at ¶ 7.) But the terms of the lease documents attached to the Complaint did not grant Bell this option. (See Compl. Ex. 2.) In any event, Bell says that he is willing and able to continue paying rent and remain in the Property, or to purchase the Property outright. (Id. at ¶ 9.) Indeed, he says that the Trustee represented to him that he could remain in his lease, and that he would be able to purchase the Property if it was not redeemed. (Id. at ¶ 21.) But he alleges that the Trustee has refused to accept his rental payments and refuses to acknowledge his option to purchase the Property. (Id. at ¶¶ 15-16.) It is unclear from the Complaint whether Bell is still residing in the Property or whether the Trustee has commenced eviction proceedings.

Bell filed this suit in state court on March 10, 2014. (Compl. at 1.) His Complaint contains four counts: Quiet Title (Count I); Fraud in the Inducement (Count II); Violation of the Protecting Tenants at Foreclosure Act ("PTFA") (Count III); and Intentional Infliction of Emotional Distress (Count IV). He seeks money damages, and asks the Court to toll the statutory redemption period and set aside the sheriff's sale. (Id.) As the only served Defendant, the Trustee removed the Complaint to this Court on April 11, 2014. (Dkt. 1, Notice of Removal.) After Defendant filed its answer (Dkt. 3), the parties engaged in some discovery. But then Defendant filed the present motion for judgment on the pleadings. (Dkt. 10.) Shortly thereafter, the parties stipulated to a stay of discovery pending resolution of the motion. (Dkt. 15.)

III. ANALYSIS

Bell seeks to protect his rights under the lease by asserting a variety of claims. While the Court recognizes his concerns, the Court finds that Bell has not stated any claims upon which relief can be granted. So Defendant's motion will be granted.

A. Standing

Defendant first argues that Bell lacks standing to challenge the foreclosure, citing both constitutional and "statutory" standing requirements. (Def.'s Reply at 4-5.) These arguments largely miss the mark.

Defendant argues that "Plaintiff lacks statutory standing to challenge the completed foreclosure because the [statutory] redemption period has expired." (Def.'s Reply Br. at 5.) Not so. The Sixth Circuit has repeatedly explained that the expiration of the statutory redemption period does not create a standing issue. See Elsheick v. Select Portfolio Servicing, Inc., 566 F. App'x 492, 497 (6th Cir. 2014); see also Langley v. Chase Home Finance, LLC, No. 10-604, 2011 U.S. Dist. LEXIS 32845, at *2 n. 2, 2011 WL 1130926 (W.D. Mich. Mar. 28, 2011).Instead, it means that Plaintiff must demonstrate "a strong case of fraud or irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside' after the redemption period expires." Sweet Air Inv., Inc. v. Kenney, 739 N.W.2d 656, 659 (Mich. Ct. App. 2007) (quoting United States v. Garno, 974 F.Supp. 628, 633 (E.D. Mich.1997)).

Defendant also argues that Bell lacks constitutional standing in this case because he is not a signatory to the mortgage. The Court disagrees. The minimum components of constitutional (Article III) standing are as follows:

First, the plaintiff must have suffered an "injury in fact"—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not 'conjectural' or 'hypothetical.' " Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be "fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court." Third, it must be "likely," as opposed to merely "speculative," that the injury will be redressed by a "favorable decision."

Zurich Ins. Co. v. Logitrans, Inc., 297 F.3d 528, 531 (6th Cir. 2002) (quoting Kardules v. City of Columbus, 95 F.3d 1335, 1346 (6th Cir. 1996)); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). In addition, "a plaintiff must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Coyne v. Am. Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999) (citation omitted).

The Court finds that Bell has Article III standing to bring this lawsuit.¹ Bell brought suit in order to protect his right to remain in the Property until the end of the lease term and preserve his option to purchase the Property under the lease. (See Compl.) Bell has alleged that he has apossessory interest in the Property due to his lease, as well as an option to purchase the Property granted to him by its former owner. See United States v. Currency $267,961.07, 916 F.2d 1104, 1107 (6th Cir. 1990) (commenting that a "property interest less than ownership, such as a possessory interest, is sufficient to create [constitutional] standing" to challenge a judicial forfeiture proceeding). He states that the Trustee has invaded those interests by refusing to honor his purchase option. Lastly, his desire to remain in the home would be vindicated by a favorable decision from this Court.

Defendants cite King v. IB Property Holdings Acquisition, 635 F.Supp.2d...