Jelani Jabari v. Fannie Mae

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0122n.06
No. 13-1699 FILED
Feb 11, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
JELANI JABARI AND LESSIE E. JABARI )
Plaintiffs-Appellants, )
)
v. )
) ON APPEAL FROM THE UNITED
FANNIE MAE AND BANK OF AMERICA, ) STATES DISTRICT COURT FOR THE
N.A. ) EASTERN DISTRICT OF MICHIGAN
Defendants-Appellees. )
)
)
)
) OPINION
)
Before: MERRITT, BOGGS, and STRANCH, Circuit Judges.
JANE B. STRANCH, Circuit Judge. “Home is a notion that only nations of the
homeless fully appreciate and only the uprooted comprehend,” American novelist Wallace
Stegner once wrote. This is a case about an uprooting, as it deals with one of the roughly seven
million homes sold in foreclosure since the foreclosure crisis began in 2007. See Adam J.
Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title,
63 Duke L.J. 637, 639 (2013). Jelani and Lessie Jabari bought their home on Greenview Road in
Detroit in 1997. In 2003 they mortgaged the house for $145,000. They defaulted. Bank of
America1 initiated foreclosure proceedings and, on April 6, 2011, purchased the Jabaris’ home at
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The initial loan came from Quicken Loans, with Mortgage Electronic Registration Systems
(MERS), Quicken’s nominee, holding the mortgage. On November 5, 2010, MERS assigned the
mortgage to BAC Home Loans Servicing (which was once known as Countrywide Home Loans
Servicing). BAC merged with Bank of America, and the mortgaged passed to Bank of America.
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a sheriff’s sale. Bank of America later quitclaimed the property to Fannie Mae, who commenced
eviction proceedings on November 7, 2011. The Jabaris filed suit on November 17, roughly
seven months after the sheriff’s sale, challenging the foreclosure on the grounds of “quiet title,”
“unjust enrichment,” violation of Michigan’s non-judicial foreclosure statute, “wrongful
foreclosure,” and “deceptive act and/or unfair practice.” The district court dismissed the suit
pursuant to rule 12(b)(6) of the Federal Rules of Civil Procedure and denied the Jabaris’
subsequent motion for reconsideration. We affirm.
We review 12(b)(6) rulings de novo, construing the complaint in the light most favorable
to the plaintiffs and accepting all allegations as true. Keys v. Humana, Inc., 684 F.3d 605, 608
(6th Cir. 2012). We will allow a claim to proceed as long as the complaint “contain[s] sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ctr. for
Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 369 (6th Cir. 2011) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw a reasonable inference that the defendant is liable for
the misconduct alleged.” Iqbal, 556 U.S. at 678. But “the Rules require that we not rely solely
on labels in a complaint, but that we probe deeper and examine the substance of the complaint.”
Minger v. Green, 239 F.3d 793, 799 (6th Cir. 2001); Bandy v. Fifth Third Bank, 519 F. App’x
900, 902 (6th Cir. 2013). We review a denial of a motion for reconsideration for abuse of
discretion. Sommer v. Davis, 317 F.3d 686, 691 (6th Cir. 2003).
The timing of the Jabaris’ suit is crucial. After a sheriff’s sale, Michigan provides
mortgagors a six-month redemption period during which the mortgagor can retain her legal
interest in the foreclosed property. After the redemption period concludes, “the mortgagor’s
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legal rights in the property vanish and can only be restored by a lawsuit pleading ‘fraud,
accident, or mistake.’” Block v. BAC Home Loans Servicing L.P., 520 F. App’x 339, 340 (6th
Cir. 2013) (quoting Senters v. Ottawa Sav. Bank, FSB, 503 N.W.2d 639, 643 (Mich. 1993)).
Thus, courts have the power to set aside the Jabaris’ statutory foreclosure. But because the
Jabaris sued after the redemption period ended, they must make out “a strong case of fraud or
irregularity, or some peculiar exigency, to warrant setting [the] foreclosure sale aside.” 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)). The alleged defect must also have actually
prejudiced the Jabaris—the Jabaris “must show that they would have been in a better position to
preserve their interest in the property absent defendant’s noncompliance with the statue.” Conlin
v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 361 (6th Cir. 2013) (quoting Davenport v.
HSBC Bank USA, 739 N.W.2d 383 (Mich. Ct. App. 2007)); see also El-Seblani v. IndyMac
Mortg. Servs., 510 F. App’x 425, 431 (6th Cir. 2013).
Although the Jabaris’ complaint alleges a sloppy mortgage process where “process” is
almost fictitious—it does not allege facts sufficient to make out even a plausible claim for the
kind of serious fraud or irregularity necessary to restore their legal rights in their home. The
complaint alleges that Bank of America failed to comply with some of the notice provisions of
the non-judicial foreclosure statute relating to the borrower’s right to try to negotiate a
modification of the mortgage. The complaint also alleges that an affidavit submitted by Bank of
America stating that it had complied with the notice provisions was not in fact based on the
affiant’s personal knowledge.
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Both of these allegations are themselves plausible—especially given the slipshod nature
of the affidavit, with the affiant’s name, John T. Harrison, marked by a faded stamp rather than
handwritten letters and his “signature” only a curlicue. Indeed, “robo signing,” the use of
affidavits such as Mr. Harrison’s is alleged to be, has resulted in strong action by state and
federal regulators and, in some states, courts invalidating foreclosure sales. See, e.g. U.S. Bank
Nat’l Ass’n v. Ibanez, 941 N.E.2d 40 (Mass. 2011).
But, as we must apply Michigan law, these allegations are not sufficient to plausibly meet
the “high standard” necessary for the Jabaris’ case to continue because neither supports an
inference that the Jabaris were actually prejudiced by these errors. Conlin, 714 F.3d at 360. The
complaint states that, despite the alleged lack of notice, the Jabaris attempted to negotiate a
modification of their mortgage. The Jabaris, thus, were not prejudiced by the alleged lack of
notice. They attempted to modify the mortgage; it was all they could have done. See Kim v.
JPMorgan Chase Bank, N.A., 825 N.W.2d 329, 338 (Mich. 2012); see also Worthy v. World
Wide Fin. Servs., Inc., 347 F. Supp. 2d 502, 511 (E.D. Mich. 2004). For the same reasons, we
conclude that the affidavit, whatever its defects, could not have prejudiced the Jabaris.2
We may never know what really happened between the Jabaris and Bank of America. As
the district court intimated, perhaps a better complaint would have told a fuller story, one that
met the required standard by alleging a strong case of fraud, accident, or mistake. But
Michigan’s law, which strongly favors “giving security and finality to purchasers of foreclosed
2
Which is not to say that such an affidavit could not form the basis for a claim under a different
set of alleged facts. See Gorki v. CTX Mortg. Co., No. 12-CV-12250, 2013 WL1316931, at *5–6
(E.D. Mich. Mar. 29,2013) (granting plaintiff leave to amend fraud claim based on robo-
signing).
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properties,” is strict, even viewed through the lenient lens of the Federal Rules of Civil
Procedure. Conlin, 714 F.3d at 359. We therefore AFFIRM.
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