Coyer v. HSBC Mortgage Services, Inc.

Citation:
12a0396p.06
Tag(s):
Ruling:
Sixth Circuit, in a per curiam opinion in a non-bankruptcy case, affirmed dismissal of borrowers' complaint alleging (1) breach of fiduciary duty; (2) negligence/negligence per se; (3) common law fraud; (4) breach of the implied covenant of good faith and fair dealing; (5) violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.; and (6) intentional infliction of emotional distress arising out of a MIchigan real estate loan transaction.
Procedural context:
Appeal from United States district court order granting judgment on pleadings to mortgage-holder.
Facts:
Borrowers entered into a mortgage agreement with Option One Mortgage Corporation (Option One) for the purchase of certain reap property located in Michigan. Subsequently, Option One assigned the mortgage to Mortgage Electronic Registration Systems, Inc. (MERS). Subsequently, HSBC Mortgage Services, Inc. purchased the mortgage from MERS. Borrowers allegedly stopped making payment to HSBC in 2010, and HSBC began foreclosure proceedings pursuant to the mortgage contract’s “power of sale” clause. Borrowers a complaint asserting numerous allegations concerning alleged illegal conduct purportedly practiced in the mortgage industry. With respect to HSBC, Borrowers asserted that HSBC conspired to induce them into a predatory loan agreement and contained counts asserting (1) breach of fiduciary duty; (2) negligence/negligence per se; (3) common law fraud; (4) breach of the implied covenant of good faith and fair dealing; (5) violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.; and (6) intentional infliction of emotional distress. Borrowers also sought an injunction to stop the foreclosure sale which the magistrate judge in his report and recommendation to the district court recommended be denied. The district court denied the requested injunction and HSBC filed a motion to dismiss the complaint. Treating HSBC’s motion to dismiss as a motion for judgment on the pleadings, the district court concluded that under applicable federal and Michigan state law HSBC was entitled to judgment because: (1) a fiduciary duty does not generally arise within the context of a borrower-lender relationship, and Borrowers failed to allege special circumstances to override the general rule; (2) the negligence claim was barred by the applicable three-year statute of limitations and, even if the claim were not barred, HSBC was not involved in any alleged lack of disclosures between the Borrowers and Option One; (3) Borrowers’ fraud claim also relates to an alleged lack of disclosures made at the time they entered into their mortgage agreement with Option One, and HSBC had no involvement with that transaction; (4) Michigan law does not recognize a claim for breach of the implied covenant of good faith and fair dealing; (5) Borrowers’ TILA claim is barred by the applicable one-year statute of limitation, and even if the claim is not barred, HSBC had no involvement with the inception of the mortgage with Option One; and (6) Borrowers failed to sufficiently allege a claim for intentional infliction of emotional distress because they did not present evidence that HSBC’s actions with respect to the planned foreclosure were so outrageous and extreme as to go beyond all possible bounds of decency. In a Per Curiam opinion, the Sixth Circuit affirmed.
Judge(s):
Merritt, Martin and Gilman

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