Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—EDMich: Michigan Homeowners’ Consumer Law Claim Against Mortgage Lenders Dismissed, (Nov 20, 2012)

By Tobias J. Gillett, J.D., LLM

Because residential lending activities by a federal bank were excluded from the Michigan Consumer Protection Act (MCPA), the federal district court in Detroit has granted Wells Fargo’s motion to dismiss MCPA claims against it in a lawsuit brought by Michigan homeowners (Minneweather v. Wells Fargo Bank, N.A., November 19, 2012, Cohn, A.). The homeowners, Edward and Kris Minneweather, had claimed violations of the MCPA during the process of foreclosure.

In June 2008, the Minneweathers mortgaged their home to MERSCORP, Inc. (MERS), as nominee for MBS Mortgage Company, LLC (MBS), in exchange for a loan of $226,708. In February 2010, MERS assigned the mortgage to Wells Fargo. The Minneweathers then defaulted on the loan, but reached an agreement with Wells Fargo to modify the loan. After the Minneweathers defaulted on the loan again, Wells Fargo began foreclosure proceedings, and sent a notice of acceleration of the note. Although the Minneweathers and Wells Fargo engaged in discussions regarding potential additional modifications of the loan, the Minneweathers filed suit in July 2012.

Among other claims, the Minneweathers filed MCPA claims against Wells Fargo and MERS. The MCPA excludes any “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” The court found that federal and state courts had both consistently held that this exclusion applied to “residential lending activities of state and federal banks.” Therefore, the court dismissed the MCPA claim against Wells Fargo. As to the claim related to MERS, the court observed that MERS, as the nominee for MBS, had only become involved in order to assign the mortgage from MBS to Wells Fargo. Moreover, the complaint provided only the elements required to establish a claim under the MCPA, rather than citing facts in support of the claim, and thus did not meet the pleading requirements established under Ashcroft v. Iqbal, 556 U.S. 662 (2009). Consequently, the court dismissed the claim against MERS as well.

The court also dismissed claims alleging slander of title, wrongful foreclosure, fraud, and Truth in Lending Act violations, as well as a quiet title claim.

The case is No. 12-13391.

Lawrence N. Radden for Edward Minneweather. Catherine M. Derthick (Plunkett Cooney) for Wells Fargo Bank, N.A.

Cases: ConsumerProtection MichiganNews