Lockhart v. Sun West Mortgage Company, Inc.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JAMEEL LOCKHART,
Plaintiff,
Case No. 2:25-cv-11341
v. U.S. DISTRICT COURT JUDGE
GERSHWIN A. DRAIN
SUN WEST MORTGAGE
COMPANY, INC.,
Defendant.
_________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO
DISMISS [#17], DENYING PLAINTIFF’S MOTION FOR LEAVE TO FILE
SECOND AMENDED COMPLAINT [#21], DENYING AS MOOT
PLAINTIFF’S MOTION FOR A TEMPORARY RESTRAINING ORDER
AND PRELIMINARY INJUNCTION [#11], AND DENYING AS MOOT
PLAINTIFF’S MOTION TO STRIKE THE AFFIDAVIT OF SYDNEY
FERNANDEZ [#23]
I. INTRODUCTION
Presently before the Court are the following motions: (1) Defendant Sun West
Mortgage Company, Inc.’s Motion to Dismiss [#17]; (2) Plaintiff Jameel Lockhart’s
Motion for Leave to File Second Amended Complaint [#21]; (3) Plaintiff’s Motion
for Temporary Restraining Order and Preliminary Injunction [#11]; and (4)
Plaintiff’s Motion to Strike the Affidavit of Sydney Fernandez [#23]. Upon review
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of the parties’ submissions, the Court concludes that oral argument will not aid in
the disposition of these motions, and thus they will be decided on the briefs. See
E.D. Mich. L.R. 7.1(f)(2).
For the reasons that follow, Defendant’s Motion to Dismiss [#17] is
GRANTED; Plaintiff’s Motion for Leave to File Second Amended Complaint [#21]
is DENIED; Plaintiff’s Motion for Temporary Restraining Order and Preliminary
Injunction [#11] is DENIED AS MOOT; and Plaintiff’s Motion to Strike the
Affidavit of Sydney Fernandez [#23] is DENIED AS MOOT.
II. BACKGROUND
Plaintiff, proceeding pro se, initiated the present lawsuit on May 7, 2025 by
filing a “Motion for Summary Judgment and Default Judgment.” ECF No. 1. He
then filed a Complaint on May 12, 2025, and an Amended Complaint on May 19,
2025. In his Amended Complaint, Plaintiff asserts that he entered into a “mortgage
loan transaction” with Defendant on or about December 11, 2023. ECF No. 6,
PageID.109. Following Defendant’s purported nondisclosures and
misrepresentations regarding loan terms, Plaintiff allegedly served Defendant with
a “Notice of Right to Rescind,” a “Notice of Default and Opportunity to Cure,” and
a “formal offer of Accord and Satisfaction, accompanied by conditional settlement
[checks] clearly marked and communicated as full and final settlement of all claims
related to the mortgage loan.” Id. at PageID.109-10. Plaintiff asserts that Defendant
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accepted and deposited the checks, thereby accepting the accord pursuant to Section
3-311 of the Uniform Commercial Code (“UCC”). Despite this purported
acceptance, Defendant allegedly continued collection efforts and foreclosure
proceedings, failed to discharge Plaintiff’s mortgage obligation, and failed to
acknowledge Plaintiff’s recission.
Plaintiff’s Amended Complaint alleges four causes of action. In Count I,
Plaintiff seeks a declaratory judgment finding that he lawfully rescinded the
mortgage in accordance with the Truth in Lending Act (“TILA”) and that the
mortgage is void and unenforceable. In Count II, Plaintiff asserts a breach of contract
claim based on Defendant’s continued efforts to enforce the mortgage agreement
despite its purported acceptance of the accord and satisfaction. In Count III, Plaintiff
alleges that Defendant violated TILA and federal regulations by failing to provide
Plaintiff with certain disclosures. Lastly, in Count IV, Plaintiff alleges that
Defendant violated the Real Estate Settlement Procedures Act (“RESPA”) and
federal regulations by failing to “timely and meaningfully respond to Plaintiff’s
Qualified Written Requests and Notices of Error,” and by failing to “conduct
reasonable investigations or correct errors.” ECF No. 6, PageID.112. Plaintiff seeks
damages and injunctive relief barring Defendant from “further collection or
foreclosure related to the rescinded loan.” Id.
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III. LAW AND ANALYSIS
A. Defendant’s Motion to Dismiss [#17]
Defendant moves to dismiss Plaintiff’s Amended Complaint under Federal
Rule of Civil Procedure 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, “[a]
complaint must contain sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quotations omitted). In adjudicating a motion to dismiss, a court must “construe the
complaint in the light most favorable to the plaintiff, accept its allegations as true,
and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh,
487 F.3d 471, 476 (6th Cir. 2007). “Pro se complaints are to be held to less stringent
standards than formal pleadings drafted by lawyers, and should therefore be liberally
construed.” Williams v. Curtin, 631 F.3d 380, 383 (6th Cir. 2011) (quotations
omitted). Even so, the court “need not accept as true legal conclusions or
unwarranted factual inferences.” Treesh, 487 F.3d at 476 (citation omitted).
Furthermore, while “[a]ssessment of the facial sufficiency of the complaint must
ordinarily be undertaken without resort to matters outside the pleadings,” a court
may consider items of public record in adjudicating a motion to dismiss. Gavitt v.
Born, 835 F.3d 623, 640 (6th Cir. 2016) (citation omitted).
For the reasons that follow, the Court finds that Plaintiff’s Amended
Complaint fails to state a claim to relief that is plausible on its face.
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i. Counts I and III
Counts I and III of Plaintiff’s Amended Complaint arise from alleged
violations of TILA. In Count III, Plaintiff alleges that Defendant “failed to provide
the disclosures required by TILA and Regulation Z, including a clear right to rescind
and accurate finance charge disclosures.” ECF No. 6, PageID.111. Similarly, in
Count I, Plaintiff seeks a declaratory judgment finding that the mortgage loan was
lawfully rescinded pursuant to TILA and, thus, is void and unenforceable. Id.
Congress enacted TILA “to facilitate the consumer’s acquisition of the best
credit terms available[,] and to protect the consumer from divergent and at times
fraudulent practices stemming from the uniformed use of credit.” Jones v.
TransOhio Sav. Ass’n, 747 F.2d 1037, 1040 (6th Cir.1984) (citation omitted).
“Consistent with this purpose, the Act gives a consumer-borrower the right to
rescind a loan secured by the borrower’s principal dwelling within three business
days of the transaction.” Yaldu v. Bank of America Corp., 700 F. Supp. 2d 832, 840
(E.D. Mich. 2010) (citing 15 U.S.C. 1635(a)). After three business days, TILA
allows for rescission of the loan where “the lender fails to deliver certain forms or
to disclose important terms accurately.” Id. (quoting Beach v. Ocwen Fed. Bank, 523
U.S. 410, 411 (1998)). TILA’s right of recission does not apply to a “residential
mortgage transaction,” which is defined by the statute as a “transaction in which a
mortgage, deed of trust, purchase money security interest arising under an
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installment sales contract, or equivalent consensual security interest is created or
retained against the consumer's dwelling to finance the acquisition . . . of such
dwelling.” 15 U.S.C. §§ 1635(e)(1), 1602(x); see also Yaldu, 700 F. Supp. 2d at 841.
Here, Plaintiff’s Amended Complaint alleges that he entered into a “mortgage
loan transaction” with Defendant on or around December 11, 2023. While the
complaint does not identify the specific transaction at issue, Defendant contends—
and Plaintiff does not dispute—that the transaction at issue relates to Plaintiff’s
purchase of a residential property located at 1304 Devonshire Road, Grosse Pointe
Park, Michigan 48230. Plaintiff’s mortgage instrument—which he signed on
December 7, 2023 and was recorded with the Wayne County Register of Deeds on
December 14, 2023—indicates that he borrowed $466,297.00 from Defendant,
secured by a purchase money mortgage, to purchase the residential property.
Furthermore, Plaintiff’s Amended Complaint alleges that he presently resides at that
address. Against this backdrop, it is clear that the transaction giving rise to Plaintiff’s
TILA claims is a “residential mortgage transaction” as defined by the statute.
Because TILA’s right of recission does not apply to such transactions, Plaintiff is
not entitled to relief under this statute. As such, Counts I and III of Plaintiff’s
Amended Complaint fail to state a plausible claim to relief, and dismissal of these
counts is thus appropriate.
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ii. Count II
Count II of Plaintiff’s Amended Complaint alleges breach of contract.
Plaintiff claims that, in accordance with UCC § 3-311, he “made a clear,
unambiguous offer of accord and satisfaction” by tendering conditional settlement
checks that were “clearly marked and communicated as full and final settlement of
all claims related to the mortgage loan.” ECF No. 6, PageID.109, PageID.112. By
depositing these checks, Plaintiff posits, Defendant accepted the accord and
satisfaction, and its continued efforts to enforce the mortgage agreement constitute
breach of contract.
Plaintiff’s Amended Complaint fails to state a plausible breach of contract
claim. For one, Section 3-311 of the UCC applies only to negotiable instruments,
and a mortgage on real property is not a negotiable instrument. UCC § 3-102
(providing that Article 3 of the UCC “applies to negotiable instruments”); Howze v.
New Century Mortg. Corp., No. 08-13458, 2008 WL 5110521, at *1 n.1 (E.D. Mich.
Dec. 2, 2008); see also Mox v. Jordan, 186 Mich. App. 42, 46 (Mich. Ct. App. 1990)
(recognizing that “[a] mortgage instrument is not a negotiable instrument” and
instead “merely secures payment of the negotiable instrument”). Furthermore, under
Michigan’s statute of frauds, the purported accord and satisfaction must have been
memorialized in a written instrument signed by Defendant in order to be enforceable.
Michigan’s statute of fraud provides, in pertinent part, as follows:
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A person shall not bring an action against a financial institution to enforce any
of the following promises or commitments of the financial institution unless
the promise or commitment is in writing and signed with an authorized
signature by the financial institution:
(a) A promise or commitment to lend money, grant or extend credit, or make
any other financial accommodation.
(b) A promise or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other financial
accommodation.
(c) A promise or commitment to waive a provision of a loan, extension of
credit, or other financial accommodation.
MICH. COMP. LAWS 566.132(2) (emphasis added). Plaintiff’s Amended Complaint
does not allege the existence of a written agreement, signed by Defendant, that
memorializes the alleged accord and satisfaction. Accordingly, Plaintiff’s Amended
Complaint fails to state a plausible breach of contract claim, and dismissal of Count
II is therefore appropriate.
iii. Count IV
Lastly, Count IV of Plaintiff’s Amended Complaint alleges violations of
RESPA and Regulation X, RESPA’s implementing regulation. Specifically, Plaintiff
claims that Defendant “failed to timely and meaningfully respond to Plaintiff’s
Qualified Written Requests and Notices of Error,” and “failed to conduct reasonable
investigations or correct errors as required by RESPA and Regulation X.” ECF No.
6, PageID.112.
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As this Court has recognized, “a complaint alleging violations of Regulation
X and RESPA must make more than a naked claim of actual damages,” and instead
must “allege damages that are traceable to the defendant’s conduct.” Wright v.
Ocwen Loan Servicing, LLC, No. 19-10763, 2019 WL 3714522, at *2 (E.D. Mich.
Aug. 7, 2019) (citation omitted). Here, Plaintiff’s Amended Complaint does not
explain how the damages he seeks are traceable to Defendant’s alleged violations of
RESPA and Regulation X. It instead contains a conclusory allegation that Plaintiff
is entitled to damages. Because Plaintiff has not alleged actual damages that are
traceable to Defendant’s conduct, dismissal of Count IV is appropriate.
In sum, the Court finds that Plaintiff’s Amended Complaint fails to state a
claim to relief that is plausible on its face. Accordingly, Defendant’s Motion to
Dismiss is granted. Plaintiff’s Amended Complaint is dismissed in its entirety.
B. Plaintiff’s Motion for Leave to File Second Amended Complaint
In his motion for leave to file a second amended complaint, Plaintiff seeks to
supplement his existing TILA claims with additional factual allegations. He claims
there is “new evidence” that directly supports his TILA recission claims “by
showing that the mortgage was executed under coercion and duress, undermining
Defendant’s reliance on the ‘residential mortgage transaction’ exemption.” ECF No.
21, PageID.330-31. In his proposed Second Amended Complaint, Plaintiff alleges
that he initially signed the mortgage documents by denoting “without prejudice UCC
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1-308” on the signature pages, thus “reserving his rights.” Id. at 335. Later that day,
the title agent allegedly informed Plaintiff that Defendant would not release the
closing funds unless Plaintiff re-signed the signature pages without that denotation,
and that his refusal “would result in losing the home purchase, $5,000 earnest
money, and appraisal/inspection expenses.” Id. Plaintiff claims he subsequently re-
signed the mortgage agreement under “coercion and economic duress,” and as such,
the transaction is not a “residential mortgage transaction.” Id. at PageID.335-36.
Federal Rule of Civil Procedure 15(a)(2) provides that a court should freely
grant leave to amend a complaint “when justice so requires.” Fed. R. Civ. P. 15(a)(2).
“Factors that may affect that determination include undue delay in filing, lack of
notice to the opposing party, bad faith by the moving party, repeated failure to cure
deficiencies by previous amendment, undue prejudice to the opposing party, and
futility of the amendment.” Com. Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d
327, 346 (6th Cir. 2007) (citation omitted).
Here, denial of Plaintiff’s motion for leave to file a second amended complaint
is appropriate because the proposed amendments would be futile if allowed.
Plaintiff’s assertions of coercion and duress do not transform the nature of the
transaction or otherwise render TILA applicable. The mortgage agreement remains,
in form and function, a residential mortgage transaction as defined under TILA.
Accordingly, because TILA expressly provides that the right to recission does not
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apply to residential mortgage transactions, Plaintiff’s proposed amendments would
be futile if allowed. Therefore, Plaintiff’s motion for leave to file a second amended
complaint is denied.
C. Plaintiff’s Motion for Temporary Restraining Order and Preliminary
Injunction, and Plaintiff’s Motion to Strike the Affidavit of Sydney
Fernandez
Lastly, Plaintiff moves for a temporary restraining order and preliminary
injunction enjoining Defendant from reporting negative information concerning
Plaintiff to any consumer credit reporting agency until this case is resolved. He also
moves to strike the affidavit of Sydney Fernandez, which Defendant submitted in
support of its response to Plaintiff’s motion for a temporary restraining order and
preliminary injunction.
Under Article III of the United States Constitution, federal courts can only
decide “Cases” or “Controversies.” U.S. Const. art. III, § 2. Federal courts may
adjudicate “only genuine disputes between adverse parties, where the relief
requested would have a real impact on the legal interests of those parties.”
Libertarian Party of Ohio v. Blackwell, 462 F.3d 579, 584 (6th Cir. 2006). “If ‘the
issues presented are no longer live or the parties lack a legally cognizable interest in
the outcome,’ then the case is moot and the court has no jurisdiction.” Id. (quoting
Los Angeles Cnty. v. Davis, 440 U.S. 625, 631 (1979)).
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Here, the Court has found that dismissal of this case in its entirety is
appropriate. As such, given that there is no live case or controversy, the Court lacks
jurisdiction to adjudicate Plaintiff’s motion for a temporary restraining order and
preliminary injunction. Therefore, that motion is denied as moot, as is Plaintiff’s
motion to strike Ms. Fernandez’s affidavit.
IV. CONCLUSION
Based on the foregoing, Defendant’s Motion to Dismiss [#17] is GRANTED;
Plaintiff’s Motion for Leave to File Second Amended Complaint [#21] is DENIED;
Plaintiff’s Motion for Temporary Restraining Order and Preliminary Injunction
[#11] is DENIED AS MOOT; and Plaintiff’s Motion to Strike the Affidavit of
Sydney Fernandez [#23] is DENIED AS MOOT.
SO ORDERED.
Dated: October 31, 2025 /s/Gershwin A. Drain
GERSHWIN A. DRAIN
United States District Judge
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
October 31, 2025, by electronic and/or ordinary mail.
/s/ Marlena Williams
Case Manager
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