NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION F ile Nam e: 13a0255n.06
No. 12-1684
UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT

CHARL I E SMI TH, JR ., Plaintiff-Appellant,

v. L I TTON L OAN SERVI CI NG, L P, a fore ign corpor ation; and DEUTSCH E BA NK NATI ONAL TRUST COMPANY, as Trustee under the Pooling and Servicing Ag ree ment Dated Ap ri l 1, 2006, Fr emont Home L oan Trust 2006-2, Asset-B acke d Certifica tes, Series 2006-2, Def endants-A

ppellees. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ON AP P EAL FROM T HE UNI TED STATES DI STRI CT C OURT FOR THE EASTERN DI STRI CT OF MI CHI GAN

BEF ORE: KEI TH, COL E, and ROGERS, Circuit J udg es. ROGERS, Ci rcuit Judge. I n 2010, Deutsche Ba

nk National Trust Company fore closed on the house of a Charlie Smit h in Romulus, Michig an. Charlie Smit h , J r. filed this action ag ainst Deutsche Ba

nk Trust and its loan se rvice r, L itton L oan Servic ing, to c ontest the fore closure unde r a variety of t heorie s. The dist rict court proper ly conclude d that none of Smit h ’s t h eo ri es justifies setting a side the for eclosure and that Smith’s unjust enric hment claim fa ils. Plaintiff Charlie Smit h, J r. claims an interest in rea l proper ty located at 39079 Buc kingha m in Romulus, Michig an. I n 2005, Charlie Smit h, Sr. mortg ag ed this pro p erty as secur ity for a $200,000 adjustable rate note. The exact rela tionship betwee n Charlie Smit h, J r., Charlie Smit h, Sr.,No. 12-1684

Smith v. Litton L oan Servic ing, LP, et al.
and the pr operty

is unclear . The re cord sug g ests that Charlie Smith, S r. and Char lie Smit h, J r. ar e differ ent individuals, but the parties and the district court confla te the two by say ing that the plaintiff, Charlie Smit h, J r., mortg ag ed the proper ty , despite the mortg ag e’s indication that Charlie Smit h, Sr.

was the mortg ag or. Construing t h e fac ts in the light most favor able to the plaintiff, this court

assumes for purposes of this opinion that Charlie Smit h, J r. is the same person as Charlie Smit h, Sr.

so as to provide the rele vant Smit h with the maxi mum potential interest in th e p ro p er t y that Michig an law ma

y provide him.
I n late 2009 and ear ly 2010, Smit h failed to make his schedule d pay ments. I n Fe bruar

y 2010, Smit h hired Bloomfield Financ ial Service s in an attempt to keep the proper ty

. Bloomfield believed that the best strateg y was to purs u e a “short pay off” in which the lender discounts the orig inal balanc e and the borrowe r ref inance s or pay s off the discounted amount. See L itton’s Mot. for Summ.
J ., Ex

. F Pack Depo., 14–16. Kend ra Pack, an employ ee of Bloomfield Financ ial Service s, distinguished betwee n a “short pay off” and a “loan modification.” Id. T h e lender ’s service r, defe ndant L itton L oan Servicing , was amena ble to a short pay off, but the sticking point was a second lien on the proper

ty for a pproxi mately

$14,000. L itton required that the se cond lien holder acc ept only $3000, but the second lien holder would only ag ree to acc ept t h e fu l l b al ance. Be cause no
ag ree ment could be r eac hed, the short pa y off did not occ ur. Def endant Deutsche Ba

nk National Trust Company initiated the fore cl o s ure proce ss, see Mich. Comp. L aws § 600.3201–.3285, by informing Smit h of his § 3205a rig ht to mediation. This

was done by posting notices at the proper ty pursuant to § 3205a(3) and publishing notices in a

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Smith v. Litton L oan Servic ing, LP, et al.

newspa per pursuant to § 3205a(4) in Marc h 2010. Smit h did not make use of this rig ht to mediation.
I n April 2010, Deutsche Ba nk Trust beg an fore closure proce eding s by publishing notices of intent
to fore close and posting notice pursuant to § 3208. Deutsche Ba nk Trust purcha sed the proper ty at a May 12, 2010 sheriff

’s sale f or $85,000. Smit h did not rede em his proper ty during the six -month statutory rede mption period, see Mich. Comp. L aws § 600.3240(8), which expired on November 12, 2010. On October 1 9, 2010, Smit h filed the prese nt suit in Way ne County Circuit Court. L itton L oan Servicing remove d the case
to the U.S. District Court for the E astern District of Michig an based upon diversity jurisdiction. Following discovery , L itton and Deutsche Ba nk Trust moved for summary judgme nt. On Fe bruar y 28, 2012, the district court g rante d summary judgme nt and issued an opinion and order

. See Smith
v. Litton L oan Servic ing, LP , No. 10-14700, 2012 WL 642060 (E.D. Mich. F eb. 28, 2012). Although Smit h raised a number of claims below, we addre ss only those arg u me n ts p r e sented in Smi th’s appellate brief. Smit h arg ues that he has standing to se t a side the sheriff ’s sale. The “ standing ” that Smith ref ers to is not standing in the Article I I I sense, but r ather a Michig an state-law require ment that is functionally simil ar to a statute of l i m itations. The district court held that Smit h lacke d standing beca use the statutory red e mption period had expired and none of his arg uments constituted sufficie nt irreg ularities in the fore closure proce eding to justify tolling the rede mption period. We need not rely

on Michig an’s standing require ment beca use the district court corr ectly conclude d that neither

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Smith v. Litton L oan Servic ing, LP, et al.
irreg ularity alleg ed by Smit h war rante d tolling of the rede mption period. There fore , Smit h’s interest in the proper

ty was e x tinguished by

the sherif

f’s sale

. Smit h alleg es t wo i rr eg ularities in the fore closure proce ss. First, he arg ues that Michig an Compil ed L aws §§ 600.3205a–.3205c require d: (1) a ninety -day extension of the fore closure date, (2) a deter mination of whether

Smit h was e ligible for a loan modific ation, and (3) Smit h’s re ceipt of a letter with th e re q u i re d calc ulations explaining why modification was denied. Reg arding the ninety -day extension, as the rig ht-to-mediation notice that Smit h rec eived explained, to rec eive the extension, Smit h had to contac t Deu ts c h e B a n k Trust’s desig nate, Orlans Associates, within fourtee n day s. See Mich. Comp. L aws § 600.3205a(1) (e)

. S m i t h h as n ot put forth any evidenc e that he
contac ted Orlans within fourtee n day s. Reg arding his elig ibilit y for a loan modification, as t h e district court rec og nized, Smit h has not indicated that he reque sted a loan modification by contac ting

a housing counselor within fourtee n day s as require d by § 3205b(1). The loan-modifica tion proce ss hinge s on the initial contac t with a housing counselor beca use the lender rec eives the documents that would allow it to calc ulate the borrowe r’s elig ibilit y afte r the counselor informs the lender that the borrowe r wishes to modify his loan. See §§ 3205b–3205c. The only case that Smit h cites in support of his § 3205c arg ument, Roller v. Fede ral National Mortgage Association , No. 12-CV-11236, 2012
WL 5828625 (E.D. Mich. J une 4, 2012), is easily distinguishable beca use Roller contac ted a housing counselor, see id. at *1, while Smit h did not. Nor does Smit h’s attempt to pursue a short pay off qualify as a loan m odification request, for the two strateg ies are distinct. Be cause Smit h failed to

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avail him self of his rig hts under §§ 3205a–3205c , he has not shown any irreg ularity flowing from the loan-modifica

tion provisions. Second, Smit h arg ues that Deutsche Ba nk Trust never rec eived owner ship of the mortg ag e beca use t he assignment of the m ortg ag e to t he Trust viol ated the terms of the Trust’s Pooling and Service Ag ree ment. Smit h’s arg ument is tha t the mortg ag e enter ed the Trust afte r the Pooling and Service Ag ree ment’s define d “closing date” of t h e T rust , and there fore , the assig nment of the mortg ag e was invalid. Howeve r, Smit h was neither a party nor a t hird-par ty benef iciary to the Pooling and Service Ag ree ment, so even if its terms wer e violated, Smit h m ay not challeng e compliance with the Pooling and Service Ag ree ment. This court direc tly addre ssed a simil ar issue i n L i vonia Properties Holdings, LLC v. 12840–12976 Farmington Road Holdings, LLC , 399 F. App’x 97, 102–03 (6th Cir. 2010)

. Livonia involved a multi-step tra nsfer from the mortg ag ee to a
trust to the fore closing entity , Fa rming ton Road Holdings. L ivonia arg ued that beca use the trust was
not cre ated until afte r the date that was enter ed on the transfe r document betwee n the mortg ag ee and the trust, that this assig nment was invalid and there fore , so was the fore closure. We reje cted this
arg ument beca

use a valid “re cord chain of title,” Mich. Comp. L aws § 600.3204, exis ted. Whil e a plaintiff in a fore closure case can challeng e the exis tence of a rec ord chain of title, the rec ord chain of title is distinct from the validity of eac h underly ing ag ree ment in the chain of title. See Livonia , 399 F. App’ x at 100–03.
I n L ivonia we recog nized that an obli g or m ay asser t defe nses which rende r an assi gn m en t void. See id. at 102 (citing 6A C.J .S. Assignments § 132 (2010))

. Howeve r, Smit h has not shown

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that the assig nment to the Trust was void rathe r than voidable. T h er e is no dispute that the Trust exis ted at the time of th e assig nment. I f the Trust violated the terms of the Pooling and Service Ag ree ment by acc epting the mortg ag e, the be nefic iaries of the Trust mig ht have a

cause of ac tion, but this would make the assig nment mere ly voidable. Fur ther, as explained in Livonia , the purpose of an obligor ’s defe nses is to avoid the risk of pay ing the same debt twice. Whil e the rec ord in this

case is not as clea

r as in Livonia that the fore closing entity owns the note, there is no evidenc e that another party owns the note, so Smit h has not put forth any evid en ce showing a g enuine risk of having to pay the same debt twice. Smit h may not challeng e Deutsche Ba nk Trust’s compliance with the terms of the Pooling and Ser vice Ag ree ment.
B e c a u s e n e it h e r o f Sm it

h ’ s a ll eg ed irreg ularities in the fore closure proce eding justifies to ll in g the re demption period, Smith’s right to the prope rty was e x tinguished by

the sherif

f’s sale

. Smit h also arg ues that the district court should have g rante d his c o mm o n-law claim for unjust enric hment. The distr i ct co u rt proper ly reje cted this claim. Michig an allows a claim for unjust enric hment when a plaintiff establishes “(1) the rec eipt of a benefi t b y t h e defe ndant from the plaint i ff an d (2) an inequity resulting to the pl aintiff because of t he retention of t he benefit by the defe ndant.” Morris Pumps v. Centerline Piping, Inc. , 729 N.W.2d 898, 904 (Mich. Ct. App. 2006). Smit h arg ues that Deutsche Ba nk Trust rec eived the benef it of title to the proper

ty and the ability to

sue Smit h for the defic iency betwee n the sale price and the outstanding balanc e of the note. Smit h
say s that the inequity

is obvious because Smit h may be for ced to move f

rom the prope rty

.

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Smith v. Litton L oan Servic ing, LP, et al.

Smit h has not show n any inequity

. Smit h may have lost his proper

ty and may be forc ed to
g o throug h t h e h ar d s h i p o f moving, but he rec eived a $200,000 loan and then failed to make his promised pay

ments under the note. There is nothing inequitable about a bank’s decision to exercise

a standard, statutory fore closure reme dy when a borrowe r stops making pay ments on a loan secur ed by a mortg ag e. Economic stress can produce lamentable s ituations, but these situations are anticipated by mortg ag e ag ree ments and are not the sort of inequity that unjust enric hment is meant to addre ss. For the fore g oing r easons, the judg ment of the district cour t is affirmed.

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