NOT RECOMMENDED FOR FULL
- TEXT PUBLICATION File Name: 14a0923n.06
Case No. 14

- 1823
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

FAROUK SACO and SUHA SACO,
Plaintiffs

- Appellants ,

v.
DEUTSCHE BANK NATIONAL TRUST COMPANY,
Defendant

- Appellee

. ) ) ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN

BEFORE: BATCHELDER, SUTTON, and COOK , Circuit Judges.
SUTTON, Circuit Judge. Farouk and Suha Saco mortgaged their Michigan home to obtain a loan. W hen they could no longe r keep up with their payments , their bank foreclosed on the house

. A federal district court refused to invalidate the sheriff’s sale that ensued

. Neither will we. In 2004, the Sacos took out a $255,000 loan and secured it with a mortgage on their house

. T he Sacos defaulted nine years later, prompting Deutsche Bank

— which by then had been assigned the mortgage

— to foreclose on the house

. As required by Michigan law, t he Bank told the Sacos tha t a sheriff’s sale was imminent, and it won the property at the resulting a uction with a bid of $156, 141.61

. Once that happened, the Sacos had six months to “redeem” theirCase No. 14

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Saco v. Deutsche Bank Nat’l Trust Co.

2 property by buying it back from its new owner at the new sales price . Mich. Comp. L aws § 600.3 2 40 (1), (7)

. They did n o t try to redeem the property . Instead, after the redemption period ended , the Sacos sued the Bank in Grand Traverse County , claiming that the sheriff’s sale was invalid . The Bank removed their lawsuit to federal court, which dismissed the complaint for failure to state a claim

. Th e Sacos appeal. The appeal turns on whether the B ank properly obtained ownership of the house through the sheriff’s sale. One statute and two facts demonstrate that t he Bank permissibly owns the house. In Michigan, a valid sheriff’s sale gives “all the r ight, title, and interest” in a property to who ever wins the auction , unless the original owner redeems the property within six months. Id. § 600.3236. The Bank won the auction , and the Sacos never exercised their right of redemption

. See R. 11

- 3 at 2, PageID #100 ; R. 19 at 2

. The Sacos cannot head off this conclusion by claim ing that the Bank’s alleged violations
of the Michigan loan

- modification statute made the sheriff’s sale invalid. For one, Michigan has repealed the statute. An Act To Amend 1961 PA 236, 2012 Mich. Legis. Serv. 521 (West)

. For another, t hey cannot prevail even if we assume their allegations are true and even if we assume the statute still bears on the issue

. In Michigan, courts cannot set aside a completed sheriff’s sale without “a clear showing of fraud” or “irregularity.” Conlin v. Mortg. Elec. Registration Sys.
Inc. , 714 F.3d 355, 359 (6th Cir. 2013). The Sacos mention this standard but make no attempt to meet it with the specificity Federal Rule of Civil Procedure 9(b) requi res . See Appellants ’ Br. at 8. More, the Sacos misunderstand how the (repealed) loan

- modification statute work ed

. I t
create d a limited and exclusive remedy for violations: judicial supervision of a pending foreclosure proceeding. Mi ch. Comp. Laws § 6 00.3205c(8). T he sheriff’s sale , however, hasCase No. 14

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Saco v. Deutsche Bank Nat’l Trust Co.

3 come and gone . That leaves the courts wit h no foreclosure to supervise and the Sacos with no claim to bring , as we have said before in similar circumstances

. E .g. , Holliday v. Wells Fargo Bank, NA , 569 F. App’x 366 , 370 (6th Cir. 2014); Elsheick v. Select Portfolio Servicing, Inc. , 566 F. App’x 492, 499 (6th Cir. 2014)

. It is true that , in one instance, we said that violations of th e statute a re “structural defects” that automatically void a foreclosure. S ee Mitan v. Fed. Home Loan Mortg. Corp. , 703 F.3d 949 , 952 (6th Cir. 2012). But that was when Michigan law permitted that conclusion. T hat is no longer t he case . T he Michigan Supreme Court has since made clear that defective foreclosures

are voidable , not void from the outset , a nd voidable only if the claimant s (here the Sacos) can show they were prejudiced by the defect

. Kim v. JPMorgan Chase Bank, N.A. , 825 N.W.2d 329, 337 (Mich. 2012). Any such violation thus does not void the foreclosure from the outset. And
t he Sacos at any rate have not alleged that “they would have been in a better position to preserve their interest in the property” had the Bank complied with the statute. Id. T hey may not proceed to discovery on speculation alone. See New A lbany Tractor, Inc. v. Louisville Tractor, Inc. , 650 F.3d 1046, 1051 (6th Cir. 2011). That leaves one other question

— their action to quiet title under Mich. Comp. Laws § 600.2932(1). Michigan Court Rule 3.41 1 (B) (2)(c) explains that, to invoke that statute, the
Sacos must plead “facts establishing the superiority of the[ir] . . . claim” to the property

— showing, in other words, that the sheriff’s sale was somehow invalid. But their only arguments on this score involve the Bank’s alleged v iolations of the loan

- modification statute

. Those allegations , we have just explained, do not take the Sacos where they need to go. For these reasons, we affirm.