Carol a McBratnie v. Ditech Financial LLC ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CAROL A. MCBRATNIE, UNPUBLISHED
February 14, 2019
Plaintiff-Appellant,
v No. 341326
Oakland Circuit Court
DITECH FINANCIAL LLC, formerly known as LC No. 2017-157439-CH
GREEN TREE SERVICING LLC,
Defendant-Appellee.
Before: JANSEN, P.J., and BECKERING and O’BRIEN, JJ.
PER CURIAM.
In this breach of contract action, plaintiff appeals as of right the trial court’s order
granting summary disposition in favor of defendant under MCR 2.116(C)(8) and (C)(10). We
affirm.
I. RELEVANT FACTUAL BACKGROUND
Plaintiff, appearing in propria persona, filed an amended complaint against defendant,
her mortgage servicer, alleging breach of contract and breach of fiduciary duty. Plaintiff
disagreed with defendant’s calculation of her mortgage escrow account for the years 2015
through 2017. Plaintiff alleged that defendant had failed to properly account for the funds in her
mortgage escrow account and engaged in misappropriation of funds, which amounted to
“extortion of fictitious amounts.” Plaintiff also sought to enforce a stipulated order in a federal
matter in the trial court, namely Federal Trade Commission & Consumer Financial Protection
Bureau v Green Tree Servicing LLC, opinion of the United States District Court for the District
of Minnesota, issued April 23, 2015 (Case No 15-cv-02064-SRN-JSM) (“the stipulated order”).
Defendant flatly denied plaintiff’s allegations of mishandling of funds and presented its own
affidavit and supporting business records detailing its calculation of plaintiff’s escrow for the
challenged years. Defendant also argued that plaintiff did not have standing to enforce the
federal stipulated order in the trial court. Based on these arguments, defendant filed a motion for
summary disposition pursuant to MCR 2.116(C)(8) and (C)(10), and the trial court granted the
motion. This appeal followed.
II. STANDARD OF REVIEW
Generally, this Court reviews a trial court’s decision to grant or deny a motion for
summary disposition de novo. Lowrey v LMPS & LMPJ, Inc., 500 Mich. 1, 5-6; 890 NW2d 344
(2016). A motion for summary disposition under MCR 2.116(C)(8) “tests the legal sufficiency
of the complaint. All well-pleaded factual allegations are accepted as true and construed in a
light most favorable to the nonmoveant.” Maiden v Rozwood, 461 Mich. 109, 119; 597 NW2d
817 (1999). A motion for summary disposition made under MCR 2.116(C)(8) is properly
granted when, “considering only the pleadings, the alleged claims are clearly unenforceable as a
matter of law and no factual development could justify recovery.” Broz v Plante & Moran,
PLLC, ___ Mich App ___, ___; ___ NW2d ___ (2018) (Docket No. 340381); slip op at 3.
When reviewing a motion for summary disposition granted or denied under MCR
2.116(C)(10), this Court reviews “all documentary evidence submitted by the parties in the light
most favorable to the nonmoving party.” Broz, ___ Mich App at ___; slip op at 3, citing
Dawoud v State Farm Mut Auto Ins Co, 317 Mich. App. 517, 520; 895 NW2d 188 (2016).
Summary disposition under MCR 2.116(C)(10) is warranted when there is no
genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law. When a motion is made and supported under MCR
2.116(C)(10), the burden shifts to the nonmoving party to show, by affidavits or
other documentary evidence, that there is a genuine issue of material fact. MCR
2.116(G)(4). If the nonmoving party does not make such a showing, summary
disposition is properly granted. [Broz, ___ Mich App at ___; slip op at 3
(citations omitted).]
“A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt
to the opposing party, leaves open an issue upon which reasonable minds might differ.” West v
Gen Motors Corp, 469 Mich. 177, 183; 665 NW2d 468 (2003).
However, some of plaintiff’s claims on appeal are unpreserved, as they were not raised,
addressed, or decided by the trial court. Henderson v Dep’t of Treasury, 307 Mich. App. 1, 7-8;
858 NW2d 733 (2014). Although this Court has the “inherent power to review an unpreserved
claim of error, our Supreme Court has emphasized the fundamental principles that ‘such power
of review is to be exercised quite sparingly’ and that the inherent power to review unpreserved
issues ‘is to be exercised only under what appear to be compelling circumstances to avoid a
miscarriage of justice . . . .” Shah v State Farm Mut Auto Ins Co, 324 Mich. App. 182, 193; 920
NW2d 148 (2018), quoting Napier v Jacobs, 429 Mich. 222, 233; 414 NW2d 862 (1987).
III. TIMING OF SUMMARY DISPOSITION MOTION
Plaintiff first argues that the trial court took action on defendant’s motion for summary
disposition before discovery was completed, which denied her the opportunity to continue
discovery and bring forth new but untimely information that would have supported her claim for
civil fraud against defendant. However, plaintiff failed to raise this argument in the trial court,
and ignores “the fundamentals of appellate-preservation law, which require parties to first raise
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issues in the lower court to be addressed in that forum.” Shah, 324 Mich. App. at 194 (citations
omitted). Plaintiff has therefore waived our review of this issue, as she may not “remain silent in
the trial court and then hope to obtain appellate relief on an issue that [was] not call[ed] to the
trial court’s attention.” Id. See also Hoffenblum v Hoffenblum, 308 Mich. App. 102, 117; 863
NW2d 352 (2014) (quotation marks and citation omitted), where this Court said that “[a] party
may not claim as error on appeal an issue that the party deemed proper in the trial court because
doing so would permit the party to harbor error as an appellate parachute.”
Further, we conclude that there is no apparent reason for us to exercise our discretion and
review this issue. Plaintiff does not present a question that must be addressed to properly resolve
this matter, and no manifest injustice will result if we decline to review it. Moreover, plaintiff’s
argument is unavailing. Pursuant to the trial court’s scheduling order, discovery closed on
September 18, 2017. Defendant waited until September 27, 2017, to file its motion for summary
disposition under MCR 2.116(C)(8) and (C)(10). Therefore, discovery was already closed at the
time the summary disposition motion was filed, and plaintiff had not moved the trial court to
extend or reopen the discovery period. Plaintiff’s argument does not have merit.
IV. THE STIPULATED ORDER
Second, plaintiff argues that the trial court erroneously refused to apply the stipulated
order to this case because it is enforceable by plaintiff as an intended third-party beneficiary. We
disagree.
Plaintiff alleged in her amended complaint that defendant had knowledge that it
“willfully altered” the factors affecting her escrow account that resulted in an errant escrow
calculation and balance but chose not to correct its actions by “finding the missing funds” and
“making corrections.” As a result of these claimed violations, plaintiff alleged that defendant’s
activities and transactions were in direct violation of the stipulated order. In that case, the
Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) filed an
action against Green Tree (which later became defendant) for a permanent injunction and other
relief. Ultimately, all parties in that case agreed to entry of the stipulated order, which included
equitable monetary relief in the amount of $48,000,000.1
1
The FTC brought the action pursuant to Sections 5(a) and 13(b) of the Federal Trade
Commission Act (“FTC Act”), 15 USC 45(a) and 53(b). The CFPB brought the action pursuant
to Sections 1031(a), 1036(a)(1), and 1054 of the Consumer Financial Protection Act of 2010
(“CFPA”), 12 USC 5531(a), 5536(a)(1), and 5564, and sought civil penalties pursuant to Section
1055 of the CFPA, 12 USC 5565(c). All parties agreed to entry of the stipulated order which
included equitable monetary relief in the amount of $48,000,000, of which $18,000,000 was for
“alleged violations of the FTC Act, CFPA, and FDCPA with respect to Defendant’s alleged
misrepresentations relating to payment methods that entail a convenience fee[,]” and
$30,000,000 “for alleged violations of the FTC Act, CFPA, FDCPA, and RESPA [the Real
Estate Settlement Procedures Act] with respect to Defendant’s conduct relating to short sales and
in-process loan modifications, including Defendant’s alleged failure to timely respond to
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Here, plaintiff attempted to enforce the stipulated order in the trial court seemingly as an
intended third-party beneficiary of the judgment. The trial court declined to do so. Ultimately,
the question before us is whether plaintiff had standing to enforce the stipulated order in this
case.
“Whether a party has standing is a question of law subject to review de novo.” Groves v
Dep’t of Corrections, 295 Mich. App. 1, 4; 811 NW2d 563 (2011). This Court interprets
judgments entered by agreement of the parties in the same manner as contracts. Gramer v
Gramer, 207 Mich. App. 123, 125; 523 NW2d 861 (1994). Consent decrees are construed in the
same manner as contracts. See Board of Co Rd Comm’rs for the Co of Eaton v Schultz, 205
Mich. App. 371, 379-390; 521 NW2d 847 (1994). In ascertaining the meaning of a contract,
appellate courts give “the words used in the contract their plain and ordinary meaning that would
be apparent to a reader of the instrument.” Rory v Continental Ins Co, 473 Mich. 457, 464; 703
NW2d 23 (2005). This Court reviews de novo the proper interpretation of an unambiguous
contract. Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 463; 663 NW2d 447 (2003).
This Court also reviews de novo the legal effects of contractual clauses. Quality Prods &
Concepts Co v Nagel Precision, Inc, 469 Mich. 362, 369; 666 NW2d 251 (2003).
In order to have standing, a party must have a legally protected interest that is in jeopardy
of being adversely affected. Barclae v Zarb, 300 Mich. App. 455, 483; 834 NW2d 100 (2013). A
plaintiff must have a special injury or right, or substantial interest, which will be detrimentally
affected in a manner different from the citizenry at large. Id. A party must assert his or her own
legal rights and interests and cannot rest a claim to relief on the legal rights or interests of third
parties. Id. “Generally, one who is not a party to an agreement cannot pursue a claim for breach
of the agreement.” First Security Savings Bank v Aitken, 226 Mich. App. 291, 305; 573 NW2d
307 (1997), overruled in part on other grounds by Smith v Globe Life Ins Co, 460 Mich. 446; 597
NW2d 28 (1999).
A third-party beneficiary may seek to enforce a contract, despite not being a party, if the
contract was intended to benefit the third party. MCL 600.1405. A contract demonstrates an
intended benefit to a third party if “the promisor of said promise has undertaken to give or to do
or refrain from doing something directly to or for” the third party. MCL 600.1405(1). “[O]nly
intended third-party beneficiaries, not incidental beneficiaries, may enforce a contract under §
1405.” Koenig v City of South Haven, 460 Mich. 667, 679; 597 NW2d 99 (1999).
Here, plaintiff specifically argues that she has standing to seek redress under and enforce
the terms of the stipulated order because her mortgage was serviced by defendant, formerly
known as Green Tree, and Green Tree was party to the stipulated order. However, plaintiff was
not a party to the federal action: rather, that case was brought by federal governmental entities.
qualified written requests relating to in-process loan modifications and with respect to
Defendant’s alleged misrepresentations about the time it will take to review short sale requests.”
Federal Trade Commission & Consumer Financial Protection Bureau v Green Tree Servicing
LLC, opinion of the United States District Court for the District of Minnesota, issued April 23,
2015 (Case No 15-cv-02064-SRN-JSM), p 8.
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Plaintiff has not pointed to any language in the stipulated order indicating that the order was
intended for the benefit of, or to be enforced by, third-party private citizen consumers such as
plaintiff. To the contrary, the stipulated order specifically states that “[r]edress provided by
Defendant shall not limit consumers’ rights in any way[.]” The plain language of the stipulated
order indicates that private citizen consumers were free to bring separate actions against Green
Tree for any alleged wrongdoing. Rory, 473 Mich. at 464. Under these circumstances, plaintiff
is not an intended third-party beneficiary to the stipulated order, and the trial court did not err by
granting summary disposition in favor of defendant on this claim.
V. BREACH OF FIDUCIARY DUTY
Third, plaintiff argues that the trial court erroneously dismissed her claim that defendant
breached its fiduciary duties with respect to her escrow account. We disagree.
Under Michigan law, a fiduciary relationship does not generally arise within the context
of a lender-borrower relationship, unless a plaintiff can affirmatively show in his or her
pleadings that there is a “reposing of faith, confidence, and trust and the placing of reliance by
one on the judgment and advice of another.” Farm Credit Serv’s of Michigan’s Heartland, PCA
v Weldon, 232 Mich. App. 662, 680; 591 NW2d 438 (1998). Regardless, plaintiff argues that
because defendant maintained an escrow account for the purposes of paying property taxes,
defendant owed her fiduciary duties. Further, plaintiff argues that defendant breached its
fiduciary duties by failing to exercise due diligence in the fiduciary relationship.
True, an escrow agent may be held liable in tort for the negligent performance of or
breach of its fiduciary duties. Smith v First Nat’l Bank & Trust Co, 177 Mich. App. 264, 270-271;
440 NW2d 915 (1989). However, the duties and obligations of an escrow agent are typically set
forth in an escrow agreement, and the language of the escrow agreement is used to determine the
intent of the parties. Hills of Lone Pine Ass’n v Texel Land Co, 226 Mich. App. 120, 124; 572
NW2d 256 (1997). An escrow agent is bound by the terms and conditions of the escrow
agreement, and must strictly execute the duties voluntarily assumed. Smith, 177 Mich. App. at
271.
Here, however, the parties never executed an escrow agreement. Rather, at the time the
mortgage was originally executed, plaintiff signed an escrow waiver, indicating that she would
be personally responsible for paying all amounts due for waived escrow items on or before their
respective due dates. However, the lender may revoke the waiver according to the terms of the
security instrument, i.e., if plaintiff failed to pay any amount due on waived escrow items. On
October 16, 2012, prior loan servicer CitiMortgage, Inc. did revoke the escrow waiver, and
established an escrow account due to plaintiff’s failure to pay delinquent taxes owed to Oakland
County and the City of Berkley in the amount of $5,100.04. When defendant acquired the
servicing rights on September 1, 2014, they continued to maintain an escrow account for the
purpose of paying the property taxes on the property in question.
Because there is no escrow agreement between these parties, we look to any contract
between the parties. Here, we conclude that defendant is bound by the terms of the security
instrument, i.e., plaintiff’s mortgage, in respect to maintaining an escrow account. Although
plaintiff alleges that defendant failed to exercise due diligence in carrying out any fiduciary
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relationship that may or may not be present, she fails to identify any provision of the security
instrument that defendant has violated with respect to the escrow account. Because plaintiff has
failed to assert any violation of the relevant contract, the trial court did not err by granting
summary disposition in favor of defendant.
VI. BREACH OF CONTRACT
Finally, plaintiff argues that the trial court erred when it did not determine which party
breached the contract first. We disagree.
“The rule in Michigan is that one who first breaches a contract cannot maintain an action
against the other contracting party for his subsequent breach or failure to perform.” Michaels v
Amway Corp, 206 Mich. App. 644, 650; 522 NW2d 703 (1994) (quotation marks and citation
omitted). However with regard to the alleged breach, to survive a motion for summary
disposition, in accordance with MCR 2.116(G)(4), plaintiff as the nonmoving party may not rest
upon the allegations in her pleadings, but must set forth specific facts showing that there is a
genuine issue for trial. Plaintiff has not met this standard with regard to breach of contract.
Our review of the record reveals that plaintiff has presented no factual basis to support a
claim for breach of contract or that defendant breached a contract before she breached a contract.
Plaintiff failed to rebut any of the factual averments offered by defendant in its own affidavit,
which provided a detailed explanation the cash flows in and out of plaintiff’s escrow account as
well as defendant’s management of the escrow account for the years in question. Instead,
plaintiff presented only conclusory statements unsupported by the record alleging that
defendant’s actions constituted “civil fraud” and “extortion.” Plaintiff blindly made accusations
that defendant was “lining its pockets” with her escrow payments but never clearly identified any
money that was missing or showed misappropriation of escrow funds with record evidence.
Accordingly, the trial court did not err by granting summary disposition in favor of defendant.
Affirmed.
/s/ Kathleen Jansen
/s/ Jane M. Beckering
/s/ Colleen A. O’Brien
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