REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEFENDANT'S MOTION TO DISMISS  AND TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR LEAVE TO FILE A FIRST AMENDED COMPLAINT 
DAVID R. GRAND, Magistrate Judge.
Before the court are defendant Wells Fargo's Motion to Dismiss  and plaintiff Tonya Knight's Motion for Leave to File a First Amended Complaint , which were referred to this court for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). . For the following reasons, the court RECOMMENDS that defendant's motion  be GRANTED IN PART AND DENIED IN PART, and that plaintiff's motion  be GRANTED IN PART AND DENIED IN PART. More specifically, the court RECOMMENDS that plaintiff's Motion for Leave to File a First Amended Complaint be GRANTED as to Count Three (fraud), and DENIED as to Counts One (trespass) and Two (breach of contract). The court further RECOMMENDS GRANTING defendant's Motion to Dismiss as to Counts One (trespass) and Two (breach of contract) of Knight's Complaint, and DENYING that motion as moot as to Count Three (fraud).
A. FACTUAL BACKGROUND
1. Knight/Wells Fargo Mortgage Relationship
This case arises out of the mortgage relationship between plaintiff mortgagor Tonya Knight and defendant mortgagee Wells Fargo. (Doc. #3-4). Knight is the owner of a rental property at 14818 Washburn St. in Detroit, Michigan (the "Property"), upon which Wells Fargo held a mortgage pursuant to a 2004 re-finance transaction (the "Mortgage"). (Id.; Cplt. ¶23; Ex. C p. 2). Most relevant to this matter are the following provisions in the Mortgage:
(Mortgage ¶¶5, 7, 9) (emphasis added). In her initial complaint, Knight admits that she stopped paying her mortgage in June of 2010. (Doc. #1-1 at 29) ("as a result of lack of funds . . . [i]n June 2010 I have become unable to make payments on this Mortgage.").
2. Knight's Property Suffers a Fire and She Receives Insurance Proceeds
Knight alleges that on August 11, 2010, her tenants caused a fire to the Property, rendering it unlivable. (Cplt. ¶6). On September 20, 2010, Knight signed work authorization forms to enable a contractor to repair the Property, and she submitted the contractor's information to Wells Fargo. (Id. ¶7). On October 15, 2010, Wells Fargo agents entered the Property and changed the locks without Knight's knowledge or permission. (Id. ¶¶8, 19). Knight alleges that at that time, there was no pending foreclosure sale, and that the Property was not abandoned. (Id. ¶¶21-22). On October 18, 2010, Knight reentered the Property with the assistance of a locksmith and changed the locks so she would have continued access. (Id. ¶20).
On November 2, 2010, Knight's insurance company sent her a check, payable to her and Wells Fargo jointly, for the fire damage in the amount of $62,905.46. (Id. ¶8). It appears that at the time, Knight owed approximately $40,500 on her Mortgage loan. (Id. ¶14). On November 22, 2010, Knight called Wells Fargo to get a clearer understanding about her options for repairing the Property. (Id. ¶9). Knight alleges in her initial complaint that "Wells Fargo stated to [her] that written authorization must be received by Wells from [her] in order to work with any other outside party during the claim process." (Id. ¶11).
3. Wells Fargo Sends Knight the November 22, 2010 Fax
Knight claims that after the call, Wells Fargo faxed her 8 pages of paperwork (hereinafter "the November 22 Fax" or the "Fax") which she alleges was "not presented  in any particular order." (Id. ¶¶9-10).
Page 1 of the Fax is the cover page. Page 2 is a November 22, 2010 letter from Wells Fargo to Knight, acknowledging her recent notification of the fire damage. (Id. at 2). The letter outlines the procedures necessary to complete the repairs and explains the process for disposition of funds. (Id.). It states that, "[i]n most instances, the funds will be disbursed to you in 1/3 increments to cover the cost of repairs as they are completed," subject to periodic inspections to ensure the work is being completed properly. (Id.). The letter then states, "
Page 3 of the Fax instructed Knight to "take a few moments to review this letter and the enclosed forms as they are important to the timely processing of your claim. These guidelines have been created to help protect both you and Wells Fargo Home Mortgage
(Id.). There is a file name at the bottom of this page as well, "LD715/B06/2/OS1." (Id.).
Page 4 of the Fax states, in pertinent part, that to receive the first release of payment, "Wells Fargo Home Mortgage must receive all of the above items, except the Certificate of Completion, before processing continues.
Page 5 of the Fax is missing. (Id.). Page 6 is a certification of completion of repairs, which includes a signature line for "Tonya Knight." (Id.). The file name for this page is "LD717/B06/1." (Id.). Pages 7 and 8 of the Fax are missing. (Id.).
Page 9 is another November 22, 2010 letter from Wells Fargo, stating that "Wells Fargo Home Mortgage has been advised that you wish to payoff [sic] the loan for the above-referenced property with the settlement check(s) from the insurance proceeds." (Id.). It then states:
3. There is no cancellation or retraction of the authorization to payoff [sic] the loan from the insurance proceeds at a subsequent date.
4. You, as mortgagee, are responsible for payment of any outstanding repair bills or supplies.
5. Per diem interest will continue to accrue until
(Id.) (emphasis added). The letter requests that Knight "[p]lease send the endorsed settlement check(s) and
The next page is page 10 of the Fax. (Id.). This page contains only a loan number, Knight's name, and the following statement: "I/We, the above-listed borrower(s), acknowledge and agree to comply with all the terms as listed in this notice." (Id.). This is followed by two blank borrower signature lines and lines for dates. (Id.). Below them is the file name "LD423/B06/2/OS1." (Id.). The court will refer to this page as the "LD 423 Signature Page".
Page 11 is yet another November 22, 2010 letter from Wells Fargo, which states (incorrectly) that Wells Fargo had already received the insurance check and was holding it in a special escrow account. (Id.). The letter then states: "[d]ue to the status of your loan [presumably in default for non-payment], in order for us to continue to process your claim, please select one of the following options:
(Id.). The file name at the bottom of this page is "LD424/B06/1." (Id.). Page 12 of the Fax bears a heading indicating it is "Page 2" of this same letter, and it notes that the requirements and forms for review are enclosed in the November 22 Fax. (Id.). The file name at the bottom of this page is "LD424/B06/2/OS1." (Id.).
4. The Parties' Post-Fax Conduct
Knight claims that after receiving the Fax, she submitted all of the required Repair Documentation and the signed LD 423 Signature Page (but not the LD423 Letter) to Wells Fargo so that it could work with her insurance adjusters and contractors during the repair process. (Proposed Amended Cplt. ¶¶38, 43). She attached those materials (other than her contractor's W-9 form) as Exhibit E to her Proposed Amended Complaint. Knight claims that the only reason she included the LD 423 Signature Page with the Repair Documentation "was to provide written authorization as specified by Wells Fargo's agent and [Page 3 of the Fax]." See supra fn. 1, fn. 4. (Id. ¶44, 48, 58; Cplt. ¶11).
Subsequently, Knight and her contractor contacted Wells Fargo several times to advise it of the repairs' progress and to determine when she would receive the first of the repair funds. (Cplt. ¶12). However, on February 7, 2011, Knight received: (1) a notice from Wells Fargo that it had paid her Mortgage loan in full from the insurance proceeds; and (2) a check in the amount of $22,406.36, which was the money left over after her loan was paid off. (Id. ¶¶13-14; Ex. B at 10).
On February 14, 2011, Knight wrote to Wells Fargo to inquire why it used the insurance proceeds to pay off her note rather than for the repairs as she believed she had requested. (Id. ¶16; Ex. D). Wells Fargo wrote back stating: "When you signed and dated the LD 423 letter requesting that we use the claim funds in restricted escrow to payoff [sic] your loan, we did so...Protecting the structural integrity of your home is our number one priority...We appreciate your diligence during this repair process." (Id. Ex. E). Knight alleges that Wells Fargo, at the time it used her proceeds to pay off her loan, knew that she had intended to use the money for repairs. (Id. ¶32).
B. PROCEDURAL BACKGROUND
On April 12, 2012, Knight filed a complaint against Wells Fargo in Wayne County Circuit Court, which was subsequently removed to this court based on diversity jurisdiction . In her complaint, Knight asserts three state law causes of action. First, she claims that Wells Fargo's entrance onto the Property and changing of the locks constituted an actionable trespass. Second, Knight alleges that a contract existed between herself and Wells Fargo that required Wells Fargo to distribute the insurance proceeds in three payments for repairs on the house, and that Wells Fargo breached this contract when it used those funds to pay off her Mortgage loan. Finally, she alleges that Wells Fargo fraudulently instructed her to sign the LD 423 Signature Page in order for it to disburse the insurance funds for purposes of repairing the Property knowing it would treat her submission of that Signature Page as a request to apply those funds to her Mortgage loan balance.
Wells Fargo moves to dismiss the complaint. (Doc. #3). It argues that Knight cannot state a claim for trespass because, under the terms of the Mortgage, which Wells Fargo attaches as an exhibit to its motion,
C. APPLICABLE LEGAL STANDARDS
1. Motion to Dismiss
A motion to dismiss pursuant to Fed. R. of Civ. P. 12(b)(6) tests a complaint's legal sufficiency. Under Fed. R. Civ. P. 8(a)(2), a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." "To survive a 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, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The plausibility standard "does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Twombly, 550 U.S. at 556. Put another way, the complaint's allegations "must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (emphasis in original) (citing Twombly, 550 U.S. at 555-56).
In deciding whether a plaintiff has set forth a "plausible" claim, the 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." Williams v. Richland County Children Servs., 2012 WL 2874041 at *3 (6th Cir. Jul. 13, 2012) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476) (6th Cir. 2007). See also Erickson v. Pardus, 551 U.S. 89, 94 (2007). That tenet, however, "is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice," to prevent a complaint from being dismissed on grounds that it fails to sufficiently comport with basic pleading requirements. Iqbal, 129 S.Ct. at 1949. See also, Twombly, 550 U.S. at 555; Howard v. City of Girard, Ohio, 346 Fed. Appx. 49, 51 (6th Cir. 2009). Furthermore, a court is not required to "create a claim which [a plaintiff] has not spelled out in his pleading." Clark v. Nat'l Travelers Life Ins. Co., 518 F.2d 1167, 1169 (6th Cir. 1975). Ultimately, "[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1949.
Pleadings filed by pro se litigants are entitled to a more liberal reading than would be afforded to formal pleadings drafted by lawyers. Thomas v. Eby, 481 F.3d 434, 437 (6th Cir. 2007). Nonetheless, "[t]he leniency granted to pro se [litigants] ... is not boundless," Martin v. Overton, 391 F.3d 710, 714 (6th Cir.2004), and "such complaints still must plead sufficient facts to show a redressable legal wrong has been committed." Baker v. Salvation Army, No. 09-11424, 2011 WL 1233200, at *3 (E.D. Mich. Mar. 30, 2011). Furthermore, even in a pro se complaint, allegations of fraud must be pled with particularity pursuant to Federal Rule of Civil Procedure 9(b). Bundy v. Fannie Mae, No. 10-12678, 2011 U.S. Dist. LEXIS 27562, *19-20 (E.D. Mich. Feb. 25, 2011). "Components such as time, place, and the contents of the fraud are critical to a finding of sufficient particularity." Id. (citing Bender v. Southland Corp., 749 F.2d 1205, 1216 (6th Cir. 1984)).
2. Motion to Amend
Subsequent to the filing of Wells Fargo's motion to dismiss, but beyond the 21-day period in which she could have amended by right, Fed. R. Civ. P. 15(a)(1)(B), Knight filed a motion to amend her complaint, seeking to add additional facts and allegations. Wells Fargo responds that any attempt by Knight to amend her complaint would be futile as her claims, even as amended, could not withstand a motion to dismiss. Pursuant to Federal Rule of Civil Procedure 15(a)(2), a party may amend its complaint by leave of the court, and leave to amend "shall be freely given when justice so requires." Rule 15 sets forth "a liberal policy of permitting amendments to ensure the determination of claims on their merits." Oleson v. United States, 27 Fed. Appx. 566, 569 (6th Cir. 2001) (internal quotations omitted). Leave to amend should only be denied where "the amendment is brought in bad faith, for dilatory purposes, results in undue delay or prejudice to the opposing party, or would be futile." Carson v. U.S. Office of Special Counsel, 633 F.3d 487, 495 (6th Cir. 2011). "A proposed amendment is futile if the amendment could not withstand a Rule 12(b)(6) motion to dismiss." Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000) (citing Thiokol Corp. v. Dep't. of Treasury, State of Michigan, Revenue Div., 987 F.2d 376, 382-83 (6th Cir. 1993).
Count One of the complaint alleges trespass. Under Michigan law, "[a] trespass is an unauthorized invasion upon the private property of another." Am. Transmission, Inc. v. Channel 7 of Detroit, Inc., 609 N.W.2d 607, 613 (Mich. Ct. App. 2000). However, "consent is an affirmative defense to a claim of trespass." Id. Here, Knight alleges that Wells Fargo trespassed on her Property when it entered without her permission and changed the locks, because she alleges that she retained exclusive rights to the Property during this time and the Property was not then subject to a "foreclosure sale," nor "abandoned." Although not clearly stated in her complaint, Knight is presumably alleging that any right Wells Fargo had to enter the house was pursuant to paragraph 7 of the Mortgage, which governs preservation and repairs on the Property, and which states "Lender or its agent may make reasonable entries upon and inspections of the Property . . . Lender shall give Borrower notice at the time of or prior to such an interior inspection . . ." (Def. Mot. Ex. 3, Mortgage ¶7).
However, Wells Fargo argues that its right to enter and secure the Property arose not under paragraph 7 of the Mortgage, but under paragraph 9 which provides, in relevant part:
(Id. ¶9) (emphasis added). Unlike paragraph 7, nothing in paragraph 9 requires Wells Fargo to provide notice prior to entry. Knight's brief and her hearing argument focus on the fact that the Property was not in foreclosure at the time Wells Fargo entered, and that she had not "abandoned" the house at the time. She also claims that she had never been notified of being in default, or given the opportunity for redemption, as required by other provisions in the mortgage.
Knight's arguments are misplaced. Satisfying any one of the applicable paragraph 9 conditions would trigger Wells Fargo's right to enter the Property. Here, Knight admitted in her December 16, 2010 letter (Cplt. Ex. C) that, as of June 2010, she stopped making her mortgage payments as required in paragraph 1 of the Mortgage, which states that "[b]orrower shall pay when due the principal of, and interest due on, the debt evidenced by the Note and any prepayment charges and late charges due under the Note." (Def. Mot. Ex. 4 at 5). Thus, pursuant to paragraph 9, Knight had explicitly consented, through her execution of the Mortgage and subsequent breach of one of its covenants, to Wells Fargo's taking "reasonable and appropriate" action to secure its interest in the property, including, but not limited to, entering the house and changing the locks, with no notice to Knight necessary. See Lupas v. U.S. Bank, NA, No. 11-14584, 2012 U.S. Dist. LEXIS 123917, *19-20 (E.D. Mich. Aug. 30, 2012) (holding that plaintiff consented to defendant lender's entry and securing of the property by way of the mortgage agreement and by failing to fulfill the obligations thereunder). In light of the circumstances, with the Property being unlivable and Knight not having made payments for months, the court cannot say that Wells Fargo's actions were not "reasonable and appropriate." Therefore, Knight's trespass claim should be dismissed for failing to state a claim upon which relief could be granted.
Even as amended, Knight's trespass claim remains deficient as a matter of law. Knight continues to allege that the entrance by Wells Fargo onto her property and the changing of her locks violated paragraph 7 of her mortgage. However, as outlined above, Wells Fargo did not need to rely on paragraph 7 in order to enter the property. Rather, Wells Fargo could rely on paragraph 9 for the reasons stated above.
2. Breach of Contract
Count Two of Knight's proposed amended complaint
Wells Fargo argues that even as amended, Knight's breach of contact claim is futile. First, Wells Fargo argues that there was "no contract between the parties requiring Wells Fargo to disburse the insurance funds to repair the Property" because, in its view, Knight affirmatively elected to have the insurance proceeds applied to her mortgage balance when she executed and returned the LD 423 Signature Page. (Doc. #25 at 10). Second, Wells Fargo argues that because Knight was in default (due to non-payment on the note) during the salient time, she "cannot maintain an action against [Wells Fargo] for [its] subsequent breach or failure to perform." (Id. at 11) (quoting Flamm v. Scherer, 40 Mich.App. 577, 585 (2007)). Taking Knight's allegations in the light most favorable to her, Williams, 2012 WL 2874041 at *3, the court rejects Wells Fargo's first argument, but finds that its second argument is meritorious.
a. Existence of a Valid Contract
To plead breach of contract under Michigan law, Knight must allege "(1) the existence of a valid contract between the parties, (2) the terms of the contract require performance of certain actions, (3) a party breached the contract, and (4) the breach caused the other party injury." Keiper, LLC v. Intier Auto. Inc., 467 Fed. Appx. 452, 459 (6th Cir. 2012). In turn, the essential elements of a valid contract are (1) parties competent to contract, (2) a proper subject matter, (3) legal consideration, (4) mutuality of agreement, and (5) mutuality of obligation." Thomas v. Leja, 187 Mich.App. 418, 422 (1991). A "valid contract requires mutual assent or a meeting of the minds on all the essential terms." Kloian v. Domino's Pizza, LLC, 273 Mich.App. 449, 453 (2006). The plaintiff bears the burden of proving the existence of the contract she seeks to enforce. Kamalnath v. Mercy Mem. Hosp. Corp., 194 Mich.App. 543, 549 (1992). Knight's amended complaint satisfies the pleading requirements on this issue.
The parties do not dispute the Mortgage's overall validity as a contract. There is no dispute about the parties' competency or the subject matter in issue, and Knight obtained a loan from Wells Fargo in exchange for a promise to repay and a security interest (the Mortgage) in the Property. Both sides agreed to this mutual consideration and to the obligations spelled out in the Mortgage (and other closing documents). The question, then, is whether Knight has pled sufficient facts to support her argument that one of those obligations required Wells Fargo to disburse the insurance proceeds to Knight for the purpose of repairing the Property.
The court's analysis begins with the Mortgage's salient terms. Paragraph 5 of the Mortgage provides, in pertinent part: "Unless Lender and Borrower otherwise agree in writing, any insurance proceeds  shall be applied to restoration or repair of the Property..."
Knight contends that she "did not sign and send in to Wells Fargo [the LD423 Letter]." (Doc. #20 at 3). Rather, she claims she sent in only the LD 423 Signature Page, and not the LD 423 Letter. (Id.). While her point lacks merit in one regard — namely because the Letter stated: "By signing the attached, you acknowledge and consent to ... [using the settlement funds to pay off your loan]" — other ambiguities and questions abound. For instance, the very first line of the LD 423 Letter states, "Wells Fargo has been advised that you wish to payoff [sic] the loan for the [Property] with the settlement check(s) from the insurance proceeds." However, it does not appear that Knight ever expressed a desire to use the insurance proceeds for that purpose.
The court must also consider the impact of what it considers to be Knight's principal allegation: that the Wells Fargo agent with whom she spoke on the phone
Finally, adding to the Fax's overall ambiguity, and the factual complexity of this case, is the fact that Page 4 of the Fax unequivocally stated: "When the [Repair Documentation] ha[s] been received,
The court rejects Wells Fargo's argument that if Knight had "any questions regarding contract terms, it is her obligation to request such information." (Doc. #25 at 10) (citing, e.g., Scholz v. Montgomery Ward & Co., 437 Mich. 83, 92 (1991)). Again, Knight alleges that she contacted Wells Fargo to inquire into the proper procedure, and that she did exactly as she was instructed. Moreover, upon receiving all 18+ pages of Knight's Repair Documentation, see Proposed Amended Cplt. Ex. E (a "Work Authorization" for "the repairs," detailed estimates for the repairs, and copies from the November 22 Fax related to the process for using the insurance proceeds to repair the Property), accompanied by the one LD 423 Signature Page without the LD 423 Letter, Wells Fargo had every reason to at least perceive an ambiguity in Knight's intentions. Yet, Wells Fargo essentially asks the court to ignore its receipt of the Repair Documentation, and to focus solely on its simultaneous receipt of the LD 423 Signature Page, as if the latter trumps the former as a matter of law. The court is unwilling to do so because, taken in a light most favorable to Knight, she has stated a plausible claim that: (1) Wells Fargo had a contractual obligation to use the insurance proceeds to repair the Property; and (2) her submission of the LD 423 Signature Page does not evidence a valid "meeting of the minds" on an agreement to apply the insurance proceeds to her loan balance rather than using them for repair purposes. Kloian, 273 Mich. App. at 453; Twombly, 550 U.S. at 570.
b. Knight's Prior Breach as a Defense
Wells Fargo argues that Knight "cannot bring a breach of contract claim under the Mortgage, when she breached the Mortgage first." (Doc. #25 at 11). The Mortgage's first covenant required Knight to "pay when due the principal of, and interest on, the debt evidenced by the Note ..." (Doc. #3-4 at 5). Although Knight now claims that she was not in "default," the court need not accept that legal conclusion as true, and it takes notice of her December 16, 2010 letter in which she admits that she had not made her Mortgage payments for months. Supra fn. 8.
"The rule in Michigan is that one who first breaches a contract cannot maintain an action against the other contracting party for his subsequent breach or failure to perform." Michaels v. Amway Corp., 206 Mich.App. 644, 650 (1994) (quoting Flamm v. Scherer, 40 Mich.App. 1, 8-9) (1972)). The rule only applies if the initial breach was substantial. Id. Clearly, Knight's failure to make multiple monthly payments constitutes such a breach. Tawfik v. BAC Home Loans Servicing, LP, 2011 WL 6181441, at *3 (Dec. 13, 2011). Because Knight's breach preceded any contractual obligation Wells Fargo might otherwise have had to disburse the insurance proceeds for repair purposes, she cannot maintain a breach of contract action for its failure to do so. Frost v. Wells Fargo Bank, N.A., ___ F.Supp.2d ___, 2012 WL 4755023, at *9 (W.D. Mich., Oct. 4, 2012); Fifth Third Bank v. Danou Technical Park, LLC, 2012 WL 933983, at *10 (Mich. App., Mar. 20, 2012) (holding that a borrower who breached mortgage/loan agreements by failing to repay the loan "is not entitled to raise a claim premised on the other party's failure to perform" and "is not entitled to specific performance of the remainder of the contract."). Accordingly, her breach of contract claim should be dismissed, and her motion to amend that claim should be denied.
Count Three of Knight's proposed amended complaint alleges fraud. Under Michigan law, the elements of a fraud claim are:
Alternative Aviation Servs. v. Meggit[UK] Ltd., 207 Fed. Appx. 506, 514 (6th Cir. 2006) quoting Hi-Way Motor Co. v. Int'l Harvester Co., 398 Mich. 330, 336 (1976). Furthermore, under Federal Rule of Civil Procedure 9(b), "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Id.
Knight alleges that she contacted Wells Fargo by phone on November 22, 2010, to determine what her options were for repairing the Property, and that in response, an agent in Wells Fargo's property loss department faxed her the twelve-page Fax. (Proposed Amended Cplt. ¶10). She alleges that this agent specifically instructed her to endorse "the last signature page" in order to authorize disbursement of the insurance claim funds for repair purposes, and to provide written authorization to allow Wells Fargo to work with any and all parties during the claims process. (Id. ¶¶12, 48). Supra fn. 1, 4, 15. She alleges that this representation was a verbal one. (Proposed Amended Cplt. ¶60). Knight alleges that the last signature page in the November 22 fax was the LD 423 Signature Page. (Id. ¶¶52, 62).
Knight alleges that she relied on the statement of the Wells Fargo agent and performed as instructed by the agent and according to the instructions in the Fax in order to process a claim for repairs, as she sent Wells Fargo all of the required Repair Documentation and written authorization (via the "last signature page," the LD 423 Signature Page). (Id. ¶¶11, 38-39, 50, 54-55, 62, 65). She alleges that she did not send back the LD 423 Letter, which, per the instructions in that Letter, arguably was to be sent back in order to process a request to pay off the loan. Supra at 18. (Proposed Amended Cplt. ¶¶56-57). Knight further alleges that she was injured as a result of Wells Fargo agent's misrepresentation as she does not have use of the money for the repairs and is now in possession of a house she can neither repair nor rent. (Id. ¶¶63, 66). She alleges that she also cannot pay her contractor in full for the repairs already made to the property. (Id. ¶67).
Contrary to Wells Fargo's argument that Knight's allegations do not reach the level of particularity required by Rule 9(b), the court finds that the level of detail in her proposed amended complaint, as outlined above, is sufficiently specific to comply with the requirements of that Rule. She has alleged the identity of the party making the alleged misrepresentation as an agent in Wells Fargo's property loss department.
Because Knight's proposed amended fraud claim complies with Rule 9(b)'s pleading requirements, the court recommends that her motion for leave to amend her complaint as to that claim be granted, and that Wells Fargo's motion to dismiss her fraud claim be denied as moot.
For the foregoing reasons, the court
However, Wells Fargo does not explain how any of these provisions apply to the transaction at issue in this case. Any agreement between Knight and Wells Fargo regarding the application of insurance proceeds, either to the repair of the subject property or to the loan, does not appear to fall under the categories outlined above, and Wells Fargo cites no case supporting the inclusion of this type of agreement into the narrow categories of the statute. Moreover, Wells Fargo's argument ignores that the relevant agreement is the one contained in paragraph 5 of the Mortgage in which the parties agreed that "[u]nless Lender and Borrower otherwise agree in writing, any insurance proceeds ... shall be applied to restoration or repair of the Property..." (Doc. #3-4 at 8), and that the phone conversation in question simply addressed how to initiate the process for receiving the funds for that purpose.
A closer question might be whether the parol evidence rule bars inclusion of oral representations by Wells Fargo representatives. However, Wells Fargo does not make this argument and, regardless, the court finds that it is not applicable here where there is a question of fact as to the validity and effect of Knight's execution of the LD 423 Signature Page. Mardon v. Ferris, 328 Mich. 398, 400 (Mich. 1950) ("Where parol evidence is offered to show that the written contract is void or not of binding force, it is admissible; but, if the object be to prove that it was intended to mean something different from what its language imports, it is inadmissible") (internal citations omitted)