Raymond Lessl v. CitiMortgage, Inc.

515 F. App'x 467
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 19, 2013
Docket11-2285
StatusUnpublished
Cited by2 cases

This text of 515 F. App'x 467 (Raymond Lessl v. CitiMortgage, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Raymond Lessl v. CitiMortgage, Inc., 515 F. App'x 467 (6th Cir. 2013).

Opinion

COOK, Circuit Judge.

Raymond Lessl appeals the district court’s judgment granting CitiMortgage’s motion to dismiss and denying his motion to amend his complaint. For the following reasons, we AFFIRM.

*469 I.

In 2006, Lessl signed a note and mortgage with CitiMortgage to purchase a condominium in the Detroit area (the “property”). By mid-2009, Lessl began defaulting on his payments to CitiMortgage. Over the next year, Lessl and CitiMortgage engaged in loan-modification discussions, and Lessl twice refused modification offers. When these modification attempts failed, CitiMortgage initiated a foreclosure-by-advertisement, with notice published in the newspaper for four consecutive weeks as required by Michigan law. As an additional measure, CitiMortgage ensured that Lessl received actual notice of the pending foreclosure by mailing him a letter in early July when the first newspaper publication ran. (Compl. Ex. 10, Foreclosure Notice, ID # 91.) Nonetheless, Lessl faults Citi-Mortgage’s foreclosure efforts as invalid for failing to meet the Michigan requirement to post notice of the foreclosure on the property.

The property sold at the sheriffs sale for just under $200,000. The sale triggered the running of Michigan’s six-month statutory redemption period. Just days before the redemption period expired, Lessl sued CitiMortgage in state court seeking injunctive relief and to set aside the foreclosure sale for failure to follow statutory notice requirements. His complaint also sought damages under the Real Estate Settlement Procedures Act (“RESPA”), the federal Home Affordable Modification Program, and intentional misrepresentation and promissory estop-pel. Following CitiMortgage’s removal of the case, the district court dismissed all of Lessl’s claims under Federal Rule of Civil Procedure 12(b)(6) and denied him leave to amend his RESPA claim.

On appeal, Lessl contests the validity of the foreclosure sale, the dismissal of his intentional misrepresentation and promissory estoppel counts, and the denial of leave to amend his RESPA claim.

II.

A. Validity of Foreclosure Sale

Lessl argues that the district court erred in upholding the sheriffs sale because the failure to post notice of the pending foreclosure sale on his property violated Michigan Compiled Laws § 600.3208 and automatically voided the ensuing sale. The district court dismissed this foreclosure claim because it determined that Lessl showed no harm resulting from the failed posting. (R. 10, Order at 8, ID # 459.)

Michigan law distinguishes between “foreclosures with notice defects and those ■with ‘structural defects that go to the very heart of defendant’s ability to foreclose by advertisement in the first instance.’ ” Mitan v. Fed. Home Loan Mortg. Corp., 703 F.3d 949, 952 (6th Cir,2012) (brackets omitted) (quoting Davenport v. HSBC Bank USA, 275 Mich.App. 344, 739 N.W.2d 383, 384 (2007)), reh’g denied, 512 FedAppx. 539, 2013 WL 310190 (6th Cir. Jan. '25, 2013). Although structural defects will void a foreclosure, id., “a defect in notice renders a foreclosure sale voidable,” Jackson Inv. Corp. v. Pittsfield Prods., Inc., 162 Mieh.App. 750, 413 N.W.2d 99, 101 (1987). When “the mortgagor would have been in no better position had notice been fully proper and the mortgagor lost no potential opportunity to preserve some or any portion of his interest in the property,” courts uphold a completed foreclosure sale. Jackson Inv. Corp., 413 N.W.2d at 101; accord Sweet Air Inv., Inc. v. Kenney, 275 Mieh.App. 492, 739 N.W.2d 656, 662 (2007).

With the letter from CitiMortgage advising him of the foreclosure sale four weeks before it occurred, Lessl cannot *470 demonstrate prejudice from the non-posting. We reject his argument because he retained every opportunity to enjoin the foreclosure proceedings or exercise his redemption rights. See Prince v. Metwest Mortg. Servs., Nos. 259448, 260021, 2006 WL 1084393 (Mich.Ct.App. Apr. 25, 2006).

B. Intentional Misrepresentation and Promissory Estoppel

Lessl next asserts intentional misrepresentation and promissory estoppel from a letter received from CitiMortgage that extended the deadline for him to return documents required for possible participation in the Home Affordable Modification Program, a federal foreclosure assistance program. The district court rejected Lessl’s promissory estop-pel argument because he cannot show reasonable reliance. We agree.

Promissory estoppel requires:

(l)a promise, (2) that the promisor should reasonable have expected to induce action of a definite and substantial character on the part of the promisee, and (3) that in fact produced reliance or forbearance of that nature in circumstances such that the promise must be enforced if injustice is to be avoided.

Novak v. Nationwide Mut. Ins. Co., 235 Mich.App. 675, 599 N.W.2d 546, 552 (1999) (citation omitted). As the district court found, Lessl knew for almost a year that “collection or/and foreclosure activity may continue until a foreclosure prevention treatment has been approved or completed.” (R. 7-2, Ex. 5, July 10, 2009 Letter, ID # 362.) During that year, CitiMort-gage worked to modify Lessl’s loan, but he twice rejected its offers. (R. 10, Op. & Order at 4, ID # 455.) And Lessl received the foreclosure notice listing the rapidly approaching sale date nearly three weeks after the deadline-extension letter. Moreover, the extension related only to an opportunity to apply for a modification—an opportunity Lessl previously declined. We are convinced that Lessl could not have .reasonably relied on the deadline-extension letter so as to invoke promissory es-toppel, and no injustice resulted.

We also agree with the district court that the letter cannot form the basis for an intentional misrepresentation claim because “[a] promise regarding the future cannot form the basis of a misrepresentation claim.” Forge v. Smith, 458 Mich. 198, 580 N.W.2d 876, 884 (1998) (citations omitted). Before any review of his situation could occur, the letter required further action from Lessl. It therefore included no misrepresentation of a past or present material fact. See Hart v. Countrywide Home Loans, Inc., 735 F.Supp.2d 741, 749 (E.D.Mich.2010) (“Plaintiffs 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.”).

C.

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