               NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 15a0198n.06

                                       Case No. 13-2187

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                                                                  FILED
                                                                            Mar 11, 2015
JOHN MORETTI and LAURA MORETTI,                    )                    DEBORAH S. HUNT, Clerk
                                                   )
       Plaintiffs-Appellants,                      )
                                                   )      ON APPEAL FROM THE UNITED
v.                                                 )      STATES DISTRICT COURT FOR
BANK OF NEW YORK MELLON, FKA                       )      THE WESTERN DISTRICT OF
BANK OF NEW YORK, AS TRUSTEE FOR                   )      MICHIGAN
THE BENEFIT OF                                     )
CERTIFICATEHOLDERS CWMBS, INC.                     )
CHL MORTGAGE PASS THROUGH                          )
TRUST SERIES 2005-2, MORTGAGE PASS                 )
THROUGH CERTIFICATES, 2005-2; BANK
OF AMERICA, N.A., SUCCESSOR BY
MERGER TO BAC HOME LOANS
SERVICING, L.P.,

       Defendants-Appellees.

BEFORE: KEITH, COOK, and DONALD, Circuit Judges.

       BERNICE BOUIE DONALD, Circuit Judge. Plaintiffs-Appellants John and Laura

Moretti appeal a district court decision dismissing their contract claims against Defendants-

Appellees Bank of New York Mellon, et al. regarding a mortgage loan on residential property in

Michigan. Plaintiffs claim that, prior to any default of their own, Defendants had repudiated the

loan modification agreement between the parties by demanding more than twice the agreed-upon

monthly payment. Defendants argue that they did not repudiate the contract and that Plaintiffs

defaulted on their loan. After completion of discovery, an extension for further development of
Case No. 13-2187, Moretti v. Bank of New York Mellon


the record, and two hearings on the matter, the district court granted Defendants’ motion for

summary judgment. For the reasons that follow, we AFFIRM.

                                       I. BACKGROUND

        Plaintiffs-Appellants John and Laura Moretti (the “Morettis”) purchased the residential

property at issue in Alden, Michigan, in November 2003. On January 14, 2005, John Moretti

executed an adjustable rate promissory note in favor of Countrywide Home Loans, Inc., d/b/a/

America’s Wholesale Lender (“Countrywide”) for $520,000.00. (R.29-2, PageID #249-52.) To

secure the note, the Morettis executed a mortgage on the property in favor of Countrywide the

same day. (R.29-3, PageID #254-65.) They also executed an adjustable rate rider and second

home rider to supplement the mortgage with Countrywide. (R.29-4, PageID #267-75.)

        The Morettis had difficulty making the mortgage payments on the property. On March

18, 2009, Countrywide and John Moretti entered into a Loan Modification Agreement, which

stated in relevant part:

                1. As of the 1st day of April, 2009, the amount payable under the
                Note or Security Instrument (the “Unpaid Principal Balance”) is
                U.S. $536,186.98, consisting of the amount(s) loaned to the
                Borrower by the Lender which may include, but not limited to, any
                past due principal payments, interest, fees and/or costs capitalized
                to date.
                2. The Borrower promises to pay the Unpaid Principal Balance,
                plus interest, to the order of the Lender. Interest will be charged
                on the Unpaid Principal Balance from the 1st day of April, 2009.
                The Borrower promises to make monthly payments in the amount
                of U.S. $1,340.47 beginning on the 1st day of May, 2009. The
                monthly payment will adjust in accordance with the Note, and
                any other loan document that is affixed to or incorporated into
                the Note and Rider and provides for, implements or relates to any
                change or adjustment in the monthly payment amount under the
                Note. If on the 1st day of February, 2035 (the “Maturity Date”),
                the borrower still owes amounts under the Note and Security
                Instrument, as amended by this Agreement, the Borrower will pay
                these amounts in full on the Maturity Date.



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Case No. 13-2187, Moretti v. Bank of New York Mellon


(R.29-5, PageID #277 (emphasis added).)

       On April 6, 2009, Countrywide paid $29,963.76 to the county treasurer for delinquent

taxes on the property.    (R.64-5, PageID #1222-23.) This created an escrow deficiency of

$29,963.76 on the Morettis’ loan account. (R.64-5, PageID #1223.) Countrywide notified the

Morettis of the payment and deficiency in a letter dated April 6, 2009. (R.64-5, PageID #1224.)

The letter explained that Countrywide had paid the taxes to protect its interest in the property and

that, under the terms of their mortgage, the Morettis were required to reimburse Countrywide for

the amount. (R.64-5, PageID #1224; see also R.29-3, PageID #256 (“Borrower shall pay to

Lender on the day Periodic Payments are due under the Note, until the Note is paid in full, a sum

(the “Funds”) to provide for payment of amounts due for . . . taxes and assessments and other

items which can attain priority over this Security Instrument as a lien or encumbrance on the

Property[.]”).) The letter also stated that Countrywide would “increase [the Morettis’] monthly

mortgage payment to fund the escrow account at a level sufficient to pay [their] property taxes

on the next tax due date” and that their “next monthly statement [would] reflect [their] new

payment amount.” (R.64-5, PageID #1224.)

       The Morettis timely made the first required payment of $1,340.47 for May 2009 under

the Loan Modification Agreement. (R.55-1, PageID #628, 642; R.59-2, PageID #861.) This

payment was applied toward the loan. (R.55-1, PageID #628, 642.)

       Countrywide then sent the Morettis a document dated May 1, 2009, that set out payment

options under the modified loan: “Option 1 Amortized Payment (principal and interest) – based

on your remaining term[,]” which the document indicated would be $2,487.64, due May 1, 2009,

and “Option 2 15-Year Amortized Payment (principal and interest)[,]” which the document

indicated would be $4,836.10, due May 1, 2009. (R.37, PageID #548.) On May 6, 2009,



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Case No. 13-2187, Moretti v. Bank of New York Mellon


Countrywide sent the Morettis a follow-up letter. (R.55-1, PageID #644-46.) The letter began

with the heading, “Significant Payment Increase Alert,” and continued, “[t]his is a message to

alert you that based on monthly payment options you have selected and potential future interest

rate changes, the monthly Minimum Payment on your mortgage will increase significantly.”

(R.55-1, PageID #644.) However, the bottom of the first page stated, “[p]lease note this is not a

notice of payment increase, but simply a forecast of what your new payment may be in the future

if your payment habits remain the same.” (R.55-1, PageID #644.) The next page contained the

following text and chart:

    POSSIBLE PAYMENT INCREASE (FOR INFORMATIONAL PURPOSES ONLY)

 Current       Current Principal   Estimated       Current    Estimated       Estimated     Current     Increase From
 Principal     Balance as a        Principal       Interest   Remaining       New Monthly   Minimum     Current
 Balance       Percentage of       Balance at      Rate       Term at         Minimum       Payment     Minimum
               Original Loan       Recalculation              Recalculation   Payment                   Payment
               Amount
 $536,185.98       103.11%          598,000.00     3.000%         320          $2,717.08    $1,340.47     $1,376.61


(R.55-1, PageID #645.) During this time, the Morettis’ mortgage passed from Countrywide to

BAC Home Loans Servicing LP, which then merged into Defendant Bank of America, N.A.

(“BANA”). (Appellee Br. 6, n.1.)

         After the Morettis’ initial May 2009 payment, John Moretti states that he submitted two

further payments of $1,340.47 (the June and July 2009 payments), but that neither check was

cashed. (R.55-2, PageID #696-97.) BANA’s records indicate that the Morettis remitted only a

second payment of $1,340.47 on or about July 2, 2009, which was posted to the loan as their

June 2009 payment. (R.55-1, PageID #628, 642.) Confused about the May 2009 mailings from

Countrywide, John Moretti called the company to clarify. He states he was repeatedly told that

someone would “look into it,” but that no one ever called him back. (R.55-2, PageID #671-72;

674; 676.)




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Case No. 13-2187, Moretti v. Bank of New York Mellon


        On July 2, 2009, BANA sent a letter to the Morettis stating that the loan payment for July

2009 had not been received and that the total due on the loan was $5,764.26. (R.30-1, PageID

#281.) After litigation began, BANA explained that this amount included the scheduled July

2009 payment of $1,340.47, a $4,318.20 escrow payment, and a $105.59 late fee, but this

itemization was not part of the July 2, 2009, letter to the Morettis. (R.30-1, PageID #281; see

also R.73, PageID #1241-42.) John Moretti states that his calls—now to BANA instead of

Countrywide—continued unreturned. (R.55-2, PageID #676 (“[T]he theme was that they would

look into it and get back to me to see what ha[d] happened.”).)

        The Morettis submitted no further payment after July 2009. (R.55-2, PageID #694-95.)

On March 31, 2010, BANA sent the Morettis a letter stating that the bank had not received the

requisite past-due payments and that the property was subject to foreclosure. (R.30-2, PageID

#283.) On April 5, 2010, the mortgage was assigned to Defendant Bank of New York Mellon

(“BNYM”). (R.30-4, PageID #288.) John Moretti filed for Chapter 7 bankruptcy on April 21,

2010.    (R.31-3, PageID #297-301.)        On July 22, 2010, BNYM began foreclosure-by-

advertisement proceedings on the property, (R.30-5, PageID #290), and a foreclosure sale was

ultimately scheduled for January 20, 2012, (R.31-2, PageID #295). The sale has been suspended

pending conclusion of the present litigation.

        The Morettis filed a complaint against BANA, BNYM, and others associated with the

mortgage in state court on May 6, 2011. (R.1-2, PageID #9-22.) Defendants removed the claim

to federal court, (R.1-3, PageID #25-26), and the Morettis filed an amended complaint shortly

thereafter on fourteen counts including breach of contract, fraud, and wrongful foreclosure,

(R.16, PageID #136-55). After discovery, Defendants moved for judgment on the pleadings and

for summary judgment. The district court held a hearing on August 1, 2012, and finding the



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Case No. 13-2187, Moretti v. Bank of New York Mellon


record insufficient, re-opened discovery and asked the parties to investigate further. (R.43,

PageID #581; R.56, PageID #838.) After further development of the record, supplemental

briefings from both sides, and a second hearing on August 8, 2013, the district court granted

summary judgment to Defendants on all claims and dismissed the Morettis’ case. (R.66, PageID

#122; R.67, PageID #1228; R.73, PageID #1264-65.) The Morettis appeal.

                                              II. ANALYSIS

        The Morettis argue that the district court erred in granting summary judgment because

they presented a genuine issue of material fact for trial on their contract claims against

Defendants.1 We review de novo a district court’s grant of summary judgment. Vander Boegh

v. Energy Solutions, Inc., 772 F.3d 1056, 1059 (6th Cir. 2014). “Summary judgment is properly

granted when, viewing the evidence in the light most favorable to the nonmoving party, there is

no genuine issue as to any material fact and the moving party is entitled to judgment as a matter

of law.” Freeze v. City of Decherd, Tenn., 753 F.3d 661, 664 (6th Cir. 2014). “[F]actual

allegations must be enough to raise a right to relief above the speculative level and to state a

claim to relief that is plausible on its face.” Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir.

2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555, 570 (2007)) (internal quotation

marks omitted).

        The Morettis raise arguments in favor of remand under multiple theories of contract law.

Their first claim is that, under the principle of contra proferentem, any ambiguity in the contract

drafted by Defendants—i.e., the Loan Modification Agreement—must be interpreted in favor of

the Morettis. See, e.g., Klapp v. United Ins. Grp. Agency, Inc., 663 N.W.2d 447, 453-55 (Mich.

2003). Under Michigan law, they argue, “if a contract is ambiguous, as the loan modification


1
 On appeal, the Morettis have abandoned their claims related to the foreclosure process in light of intervening
decisions issued by the Michigan Supreme Court. (Appellant Br. 1; Appellant Reply Br. 4.)

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Case No. 13-2187, Moretti v. Bank of New York Mellon


documents are in the present case, then the meaning of the contract is a question of fact and the

fact finder must examine extrinsic evidence to ascertain the intents of the parties.” (Appellant

Br. 20.) But by their own admission, the Morettis did not find the Loan Modification Agreement

ambiguous: they understood the terms of the contract, agreed to it, and began performance

thereunder. (Appellant Br. 8 (“It is clear that Appellants knew the [r]amifications of the loan

modification agreement and stood ready and able to make the agreed upon monthly payment of

$1,340.47.”).) They acknowledge this issue in part by clarifying that it is the combination of the

contract with Defendants’ subsequent communications to the Morettis that “create[d] an

ambiguity that must be resolved in favor of Appellants.” (Appellant Br. 18-19.) But they offer

no argument or authority under which we might interpret the communications as part of the

contract itself, and Michigan’s application of contra proferentem requires that the language of the

contract itself be ambiguous. Only with that ambiguity established does the fact finder proceed

to contemplate “such extrinsic evidence as the parties’ conduct, the statements of its

representatives, and past practice to aid in interpretation.” Klapp, 663 N.W.2d at 454 (quoting

Penzien v. Dielectric Prods. Eng’g Co., Inc., 132 N.W.2d 130, 132 (Mich. 1965)) (internal

quotation marks omitted). Accordingly, the Morettis present no genuine issue of fact on this

claim.

         Nor do the Morettis present evidence that they are entitled to proceed to trial under the

“first breach rule” in contract. It is true that, in Michigan, “one who first breaches a contract

cannot maintain an action against the other contracting party for his subsequent breach or failure

to perform.” Frost v. Wells Fargo Bank, N.A., 901 F. Supp. 2d 999, 1008 (W.D. Mich. 2012)

(quoting Flamm v. Scherer, 198 N.W.2d 702, 706 (Mich. Ct. App. 1972)). It is also true that

questions regarding the parties’ credibility are primarily for a jury. See, e.g., Bd. of Cnty Rd.



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Case No. 13-2187, Moretti v. Bank of New York Mellon


Comm’rs of Kalamazoo Cnty v. Bera, 129 N.W.2d 427, 429 (Mich. 1964). But the Morettis do

not develop this argument beyond merely quoting legal principle, and it is unclear what issue of

credibility or intent they seek to have decided by a jury under this theory. To the extent the

Morettis seek to argue that Defendants’ communications in May and July 2009 signify a breach

of the Loan Modification Agreement, the claim is too underdeveloped to create a genuine dispute

for trial.

         The core of the Morettis’ case is their claim that Defendants’ communications in May

and July 2009 “unilaterally altered” the Loan Modification Agreement to demand increased

payment.     (Appellant Br. 22.)    Per the claim, this constituted a repudiation of the Loan

Modification Agreement between the parties, effectively relieving the Morettis of any obligation

to continue payment and entitling them to recovery.

         However, as discussed at length by the district court, repudiation of a contract requires

more than confusion or misunderstanding. To repudiate a contract, a party must “unequivocally

declare[] the intent not to perform[.]” Appalachian Railcar Servs., Inc. v. Boatright Enters., Inc.,

602 F. Supp. 2d 829, 879 (W.D. Mich. 2008) (quoting Skladanowski v. Clear Channel Radio,

No. 261004, 2006 WL 3682184, at *1 n.2 (Mich. Ct. App. Dec. 14, 2006)). The Morettis have

put forward no evidence, written or otherwise, wherein Defendants declare an intent not to

perform their responsibilities under the Loan Modification Agreement. At best, the Morettis can

point to areas of confusion. While Defendants’ letters and statements in May and July 2009

were far from models of clarity, viewed in light of the requirements set out in the note, mortgage,

and loan modification, these communications were consistent with the Morettis’ contract. (R.73,

PageID #1261-62 (wherein the district court explains that “the written documents from May, I

think by the plaintiff’s own admission, don’t repudiate the agreement, don’t pull back the $1,300



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Case No. 13-2187, Moretti v. Bank of New York Mellon


payment, but rather do what actually some of the other loan documents require. . . . [B]ecause

it’s a variable rate, there is something in the note that obligates the lender to present amortization

scenarios so that the borrower knows what he or she is getting into if they scroll ahead and don’t

increase payments.”).)

       The verbal communication between John Moretti and Defendants similarly fails to

provide sufficient basis for repudiation. The district court discussed this evidence as follows:

               [W]hen I read the statements from Mr. Moretti, I think he’s being
               honest in saying he was very confused, that he called the bank and
               he was clearly very frustrated, didn’t feel like he was getting
               anywhere, but the common refrain—and it happens in multiple
               places—the common refrain is, you know, “We’ll look into it and
               get back to you.” . . . But just hearing that, “Okay, so you’re
               confused, and I’ll look into it,” that doesn’t repudiate anything.

(R.73, PageID #1262.) We agree. Absent any evidence of an unambiguous repudiation of the

Loan Modification Agreement by Defendants, the Morettis have not established a genuine issue

of material fact to be tried before a jury on this theory.

       Finally, the Morettis claim that they are entitled to reformation of the Loan Modification

Agreement on the basis of innocent misrepresentation.                  To establish an innocent

misrepresentation, a party must show “(1) a representation in a transaction between two parties;

(2) that is false; (3) that actually deceives the other party; (4) that the other party relied on; (5)

that the other party suffered damage from; and (6) [that] the party making the misrepresentation

benefitted from it.” In re Moiles, 840 N.W.2d 790, 797 (Mich. Ct. App. 2013), judgment rev’d

in part, vacated in part on other grounds, 843 N.W.2d 220 (Mich. 2014).                Despite their

subjective confusion regarding the communications with Defendants, the Morettis have not

presented evidence that Defendants made any false representation regarding the Loan




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Case No. 13-2187, Moretti v. Bank of New York Mellon


Modification Agreement.      Accordingly, this claim also fails to present a genuine issue of

material fact for consideration by a jury.

                                       III. CONCLUSION

       For the reasons stated above, we AFFIRM the district court’s grant of summary judgment

in favor of Defendants. We also deny the Morettis’ request for attorney’s fees and costs.




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