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### STATE OF MICHIGAN

COURT OF APPEALS

THE ANGELA SINACOLA LIVING TRUST and THE GUY SINACOLA LIVING TRUST,

Plaintiffs-Appellants, UNPUBLISHED November 13, 2014

v No. 317481
Oakland Circuit Court PNC BANK, N.A., and PNC MORTGAGE, alleged successor to NATIONAL CITY MORTGAGE COMPANY, LC No. 2012-127118-CH

Defendants-Appellees.

Before: W HITBECK , P.J., and F ITZGERALD and M URRAY , JJ.

P ER C URIAM

.
In this action challenging the foreclosur e on their property, plaintiffs, The Angela Sinacola Living Trust and The Guy Sinacola Livi ng Trust, appeal as of right the July 11, 2013
order 1 of the Oakland Circuit Court granting de fendants’ motion for summary disposition and dissolving the temporary injunction tolling plainti ffs’ redemption period. Resolution of this case
centers on whether defendants violated certain statutory recording requi rements in conducting a foreclosure by advertisement and, if so, whether plaintiffs suffered prejudice as a re sult. Because we hold that there was no statutory viola tion in the first instance, we affirm.

BACKGROUND

This case is about whether defendants dot ted their “I’s” and crossed their “T’s” in pursuing a foreclosure by advertis ement on plaintiffs’ property in Clarkston (the “property”). Plaintiffs first acquired their interest in th e property on April 15, 2003, by quitclaim deed from Angela Sinacola. Earlier that same day, Ms. Sinacola had taken out a mortgage on the property in favor of National City Mort gage Services Co. for approxima tely $793,000. Over the next few years, the identity of the mortgagee changed several times through an assignment as well as through several ensuing merg ers involving the assignee.

1 Although signed on July 10, 2013, the order did not appe ar in the register of actions until July 11, 2013.-2- First, the Oakland County Records refl ect that on August 27, 2004, the mortgage was assigned to National City Mortgage Co., an entity defendants refer to as “O ldco.” This is the only assignment on record. On January 4, 2005, th is assignee changed its name to National City Mortgage, Inc., which in turn merged into Na tional City Real Estate Services, LLC. National City Bank—the sole member of National City Real Estate Services—subsequently merged into defendant PNC Bank, NA, and National City Real Estate Services was dissolved. 2

Some time after these mergers, plaintiffs defaulted on the mortgage. The notice of default dated June 2, 2010, identifies defendant PNC Mortgage (a division of defendant PNC Bank) as the “servicer and owner, or authorized representative of the mortgage owner.” Despite receiving this notice, plaintiffs still failed to make payments. Accordin gly, a notice of a pending foreclosure sale was provided on April 1, 2011. Over two months later, on June 12, 2011, Ms. Sinacola requested PNC Bank to disclose the na me of the current “private investor” for the mortgage. PNC Mortgage (app arently the division responsibl e for responding) declined to release that information, and on July 12, 2011, PNC Bank foreclosed on the property by advertisement with a full credit bid for appr oximately $708,000. The Sheriff’s Deed from the sale clearly reflects PNC Bank as the party of interest and fu rther identifies PNC Bank in the following way:

PNC Bank, National Association, successor by merger to National City Bank, successor by merger to National City Mortgage Co., formerly known as NCMC NewCo., Inc., successor in interest to Na tional City Mortgage Co., subsequently known as National City Mortgage, Inc.

Despite this detailed summary of PNC Ba nk’s involvement, the property’s chain of title identified neither PNC Mortgage nor PNC Bank as having any interest at the time of foreclosure, and it is this fact upon which plaintiffs’ entire case hinges.

PROCEEDINGS

Less than two months before the expiration of the one-year redemption period, plaintiffs filed a two-count complaint agai nst defendants. Count I allege d that the foreclosure was void because the property’s chain of title disclosed ne ither PNC Bank nor PNC Mortgage’s interest as purportedly required by MCL 600.3204( 3) (requiring the party for eclosing by advertisement to record its assignment of the mortgage if that pa rty was not the original mortgagee). Count II requested the court quiet title in plaintiffs’ favor since PNC Bank and PNC Mortgage lacked a recorded interest as of July 11, 2011. Plaintiffs also sought and obtained temporary injunctive relief—extended periodically throughout the proceedings—tolling the redemption period, otherwise set to expire on July 12, 2012.

2 Defendants note that an entity formerly known as NCMC, NewCo, Inc., took over the name National City Mortgage Co. after “Oldco” ab andoned that name. The new National City Mortgage Co. later merged into National City Bank, which as noted above, merged into PNC Bank on November 6, 2009.-3- Defendants subsequently moved for summary disposition and for dissolution of the preliminary injunction. Defendants argued that because PNC Bank acquired its interest in the property “by operation of law, ” MCL 600.3204(3) was inapplicable and no recording of PNC
Bank’s interest before the foreclosure was nece ssary. Alternatively, defendants claimed that plaintiffs could not show prejudice where they were aware PNC Mortgage was servicing the mortgage as early as June 2, 2010, by virtue of th e notice of default, and plaintiffs had otherwise filed their complaint before the expiration of the redemption period despite having made no payments for three years.

Plaintiffs responded that by merging with National City Bank, PNC Bank acquired its interest affirmatively and voluntarily rather than “by operation of law,” and PNC Bank was therefore required to record it s interest in acco rdance with MCL 600.3204(3). The failure to record this interest resulted in prejudice, plai ntiffs continued, because pl aintiffs were unable to determine the actual note holder which in turn pote ntially subjected them to “double liability.”

Defendants replied that plain tiffs had conflated a voluntary bank merger with a voluntary purchase and sale agreement, and had otherwise failed to demonstrate how any prejudice flowed
from the failure to record PNC Bank’s interest. Defendants further identified the current investor
as Bank of New York Mellon in th e event the court considered that to be a material fact.

At the conclusion of the ensuing motion h earing, the trial court ruled in defendants’ favor, summarily concluding that plaintiffs faced no potential for double liability and therefore could not establish the pr ejudice necessary to void the forecl osure. An order was subsequently entered granting defendants’ motion, dissolvi ng the preliminary injunction and dismissing plaintiffs’ case. This appeal followed.

ANALYSIS

Plaintiffs initially argue that because PN C Bank voluntarily acquired its interest in the property, the failure to record that interest rendered the foreclosure by advertisement voidable under MCL 600.3204(3). Although defendants move d for summary disposition below under both MCR 2.116(C)(8) and (10), resolution of this issue (including the identification of the parties involved in the mergers) required review of evidence beyond the pleadings. Accordingly, our review falls under the standard for subrule (C)(10). 3 Espinoza v Thomas , 189 Mich App 110, 114-115; 472 NW2d 16 (1991).

3 Although the trial court ruled on ly on the secondary i ssue of prejudice, th e parties properly raised—both below and on appeal—the preliminar y issue of whether a recording deficiency
rendered the foreclosure voidable. See Kim v JPMorgan Chase Bank, NA , 493 Mich 98, 113- 116; 825 NW2d 329 (2012). Thus, this issue is properly before us. See Peterman v Dep’t of
Natural Resources , 446 Mich 177, 183; 521 NW2d 499 (1994) (holding that a trial court’s
failure to rule on an issue doe s not preclude appella te review where that issue was properly raised).-4- This Court reviews a trial court’s ruling on a motion for summary disposition under MCR 2.116(C)(10) de novo. McCoig Materials, LLC v Galui Const, Inc , 295 Mich App 684, 693; 818 NW2d 410 (2012). “A motion for summary dis position pursuant to MCR 2.116(C)(10) should be granted when there is no genuine issue of ma terial fact and the movi ng party is entitled to judgment as a matter of law.” Curry v Meijer, Inc , 286 Mich App 586, 590; 780 NW2d 603 (2009) (citation omitted). “A genui ne issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ.” West v Gen Motors Corp , 469 Mich 177, 183; 665 NW2d 468 (2003). In reviewing this issue, the Court considers all of the pleadings, a ffidavits, depositions, admissions and other documentary evidence. Corely v Detroit Bd of Ed , 470 Mich 274, 278; 681 NW2d 342 (2004). “Where the burden of proof rests with the nonmoving party, that party must respond with documentary evidence to demonstrate the exis tence of a genuine issue of material fact for trial. The failure of the nonmoving party to so respond results in the en try of judgment for the moving party.” Curry , 286 Mich App at 591 (citation omitted).

The prerequisites that must be satisfied to foreclose by advertisement are set forth in Michigan’s foreclosure by a dvertisement statute, MCL 600.3201 et seq . Among that statute’s many requirements, only its recording provisions are germane to plaintiffs’ preserved arguments on appeal. Specifically, § 3204(1)(c) requires “[t]he mortgage containing the power of sale [to be] properly recorded.” Likewise, § 3204(3) requir es that where the foreclosing party is not the original mortgagee, the record chain of title must reflect the assignment of the mortgage to the foreclosing party. As § 3204(3) provides:

If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under [MCL 600.3216] evidencing the assignment of the mo rtgage to the party foreclosing the mortgage.

Thus, “a mortgagee cannot validly foreclos e a mortgage by advertisement before the mortgage and all assignments of that mortgage are duly recorded.” Kim v JPMorgan Chase Bank, NA , 493 Mich 98, 106; 825 NW2d 329 (2012). Not every interest held by a foreclosing party who was not the original mortgagee falls within the amb it of § 3204(3), however. To the contrary, § 3204(3)’s recording requirement is in applicable if the tran sfer of title to the foreclosing party occurs by operation of law. Id . at 108-116. A transfer takes place by operation
of law if it “occurs unintentiona lly, involuntarily, or thr ough no affirmative act of the transferee.”
Id . at 110.

Our Supreme Court’s decision in Kim is instructive in distinguishing whether a transfer implicates the recording requi rement of § 3204(3). There, the Federal Deposit Insurance Corporation (FDIC) was appointed receiver fo r Washington Mutual’s holdings, including the mortgage at issue in that case. Id . at 103. Although the FDIC ha d the statutory authority under 12 USC 1821 to transfer Washington Mutual’s a ssets “without any approval, assignment, or consent,” the FDIC instead transf erred virtually all of those assets, includi ng the mortgage, to Chase through a Purchase and Assignment Agreement. Id . Chase then foreclosed on the mortgage by advertisement without ever recording the assignment. Id . at 104. Our Supreme Court held that Chase acquired th e mortgage voluntarily rather th an by operation of law because the assets “did not pass to [Chase] without any act of [Chase’s] own or regardless of [Chase’s]-5- actual intent.” Id . at 111 (citations and internal quota tion marks omitted). The Court observed that had Chase not “willingly purchased [the assets ], it would not have come into possession of plaintiffs’ mortgage.” Id . at 110-111. Accordingly, Chase’s failure to record its interest
rendered the foreclosure voidable. Id . at 115.

In this case, there is no question that the foreclosing party—PNC Bank—was not the original mortgagee. Likewise, it is undisputed that the chain of title did not identify PNC Bank as having any interest in the property before the fo reclosure. However, plaintiffs have failed to
rebut that PNC Bank derived its in terest in the propert y through a series of mergers involving the original assignee, whose in terest was duly recorded. 4 This fact is disposi tive. Indeed, in finding that Chase acquired its interest voluntarily, the Kim Court expressly distinguished the acquisition of a mortgage by a Purchase and Assignment Agreement from an acquisition by merger because during a merger, the asset transf er “occur[s] without any volunt ary or affirmative action by
defendant . . . .” Kim , 493 Mich at 111.

This is exactly what happened here. PNC Bank acquired its interest through a series of mergers, and as a result, acquired the mortgage by operation of law in accordance with federal statute—specifically, the Na tional Banking Act, 12 USC 1 et seq

. 5 Indeed, on this very point, 12 USC 215a(e) provides that (subject to certain cond itions not pertinent here), in the event of a merger, the assets of the old bank transfer to the new entity solely by virtue of the merger itself. As § 215a(e) sets forth in relevant part:

The corporate existence of each of the merging banks or banking associations participating in such merger shall be merged in to and continued in the receiving association and such receiving association sh all be deemed to be the same corporation as each bank or banking a ssociation participating in the merger. All rights, franchises, and interest of the individual merging banks or banking associations in and to every type or property . . . shall be transfe rred to and vested

4 While plaintiffs argue that PN C Bank voluntarily purchased the assets of National City before any merger occurred, they rely wholly on a newspape r article in support of that assertion. That is insufficient, however. See SSC Assoc Ltd Partnership v Detroit Gen Retirement Sys , 192 Mich App 360, 363-364; 480 NW2d 275 (1991) (explaining that document ary evidence, admissible in content, is necessary to de feat a motion for summary dis position under MCR 2.116(C)(10); opinions and inadmissible hearsay will not suffice); People v Burt , 89 Mich App 293, 295-296; 279 NW2d 299 (1979) (“[N]ewspapers are [generally] h earsay evidence of the facts stated within
them and are not admissible in eviden ce to prove such facts”); see also Detroit v Larned Assoc

, 199 Mich App 36, 39-41; 501 NW2d 189 (1993) (same). Even worse, the article at least once references PNC Bank’s acquisition of the assets as an “[a]n M and A deal,” i.e., a merger and acquisition. Thus, plaintiffs faile d to rebut that PNC Bank acquired the mortgage by virtue of the mergers rather than through a prior, separate sale.

5 The National Banking Act governs the corporate existence of the entity resulting from the merger of two or more national banks. See White v Bank of America, NA , ___ F Supp 2d ___, ___ (ND Ga, 2013), 2013 WL 6796460.-6- in the receiving association by virtue of such merger without any deed or other transfer . The receiving association, upon th e merger and without any order or other action on the part of any court or ot herwise, shall hold and enjoy all rights of property, franchises, and interests . . . in the same manner and to the same extent as such rights, franc hises, and interests were he ld or enjoyed by any one of the merging banks or banking associations at the time of the merger . . . . [Emphasis added.]

The plain language of this statute could not mo re clearly provide that a merger results in
the automatic transfer of assets under the ci rcumstances involved here. And, indeed, the Kim Court cited this very federal provision in obs erving that had the FD IC merged Washington Mutual with Chase (rather than execute a Purcha se and Transfer Agreemen t), “[t]he transaction
could have constituted a transf er by operation of law under tr aditional banking and corporate
law.” Kim , 493 Mich at 111, citing 12 USC 215a(e). Accord White v Bank of America, NA , __ F Supp 2d __, __ (ND Ga, 2013) 2013 WL 6796460 (“As a result of the merger, by operation of law [under 12 USC 215a(e)], BANA acquired the assets, rights and liabilities of BACHLS, including the Security Deed”); Dragone v PNC Bank, National Ass’n , unpublished opinion of the
United States District Court for the District of Massachusetts, issued June 7, 2013 (Docket No. Civ. A. 11-12194-RWZ), 2013 WL 2460565 (“National Ci ty Mortgage Co. s ubsequently merged with and into National City Bank . . . which be came the holder of the mortgage by operation of law. See 12 USC 215a(e)”); see also 15 Fletch er Cyclopedia on the Law of Corporations § 7088, p 118 (“The effect of the merger statutes is such that once the conditions for merger have been met, title to the property of the merged corpor ation passes to the surviving corporation by operation of law.”).

In arguing that PNC Bank acted voluntarily and affirmatively in conducting the merger, then, Plaintiffs have conflated the voluntary act of merger with the automatic transfer of assets resulting from that merger. It is the latter wh ich occurs by operation of law and which in this case precludes the application of MCL 600.3204(3) under Kim . We may affirm the trial court on this ground alone. See Messenger v Ingham Co Prosecutor , 232 Mich App 633, 643; 591 NW2d 393 (1998) (“When this Court conc ludes that a trial court has re ached the correct result, this
Court will affirm even if it does so under alternative reasoning.”).

But even if there were a re cording deficiency, plaintiffs did not suffer prejudice as a
result. See Kim , 493 Mich at 115 (holding that plaintiffs must de monstrate prejudice from plaintiffs’ failure to comply with MCL 600.3204(3) to set aside the foreclosure). “To demonstrate such prejudice, [plain tiffs] must show that they woul d have been in a better position to preserve their interest in the property abse nt defendant’s noncomplia nce with the statute.” Id

. at 115-116.

Plaintiffs claim that their potentialexposure to “double liability ” is the prejudice they suffer. They claim this prejudice may exist because—based on defendant s’ reply brief below—
the holder of the note and the hold er of the mortgage appear to be separate entities. See Talton v BAC Home Loans Servicing, LP , 839 F Supp 2d 896, 906-907 (ED Mich, 2012) (explaining that where the foreclosing party is no t the holder of the note, the debt or-plaintiff may have a genuine claim of potential exposure to double liability), citing Livonia Prop Holdings, LLC v 12840- 12976 Farmington Rd Holdings, LLC , 399 Fed Appx 97, 102 (CA 6, 2010); see also Conlin v-7- Mtg Electronic Registration Sys, Inc , 714 F3d 355, 361-362 (C A 6, 2013) (same). 6 Several problems plague this argument.

First, plaintiffs’ reliance on Talton and Livonia Prop Holdings is misplaced. Those cases pertained to whether an obligor may assert a def ect in the assignment of the mortgage to avoid exposure for double liability. See Talon , 839 F Supp 2d at 906 (citing Livonia Prop Holdings

, 399 Fed Appx at 102, in support of the proposition that an obligor “may assert as a defense any matter which renders the assignment absolutely invali d or ineffective, or void” in order to protect the obligor “from having to pay the same debt tw ice”) (internal quotations marks omitted). Here, plaintiffs do not contest the validity of the underlying assignment or subsequent mergers. Rather, the issue is how PNC Bank obtained its interest, i.e., through a voluntary transaction or by operation law, and whether there was a r ecording defect. Those cases are simply inapplicable.

Second, plaintiffs only speculate that they may face double liability. Indeed, they cite no specific demand for, let alone the existence of outstanding debt. This argument is therefore
insufficient on its face to defeat defe ndants’ motion for summary disposition. Detroit v Gen Motors Corp , 233 Mich App 132, 139; 592 NW2d 732 (1998) (“[P]arties opposing a motion for summary disposition must present more than conj ecture and speculation to meet their burden of providing evidentiary proof establishing a genui ne issue of material fact”) (citation and quotations marks omitted, brackets in original).

Third, plaintiffs’ own complaint acknowledge s that Ms. Sinacola received notice of plaintiffs’ default from PNC Mortgage and not ice of the foreclosure proceedings from PNC Mortgage/PNC Bank. Yet, aside from seeking a loan modification, plaintiffs still failed to make any mortgage payments after receiving these notices, and took no action until filing this law suit, which was almost one year after learning of the impending foreclos ure sale and six weeks before the redemption period expired. Accordingly, it wa s not the absence of the foreclosing party’s
name from the chain of title that could prejudice plaintiffs but ra ther plaintiffs’ own failure to redeem the property even after learning the identity of the foreclosing party. The recording of PNC Bank’s interest simply would not have put pl aintiffs in a better position to preserve their interest in light of these facts. See Mitan v Fed Home Loan Mtg, Corp , __ F Supp 2d __, __ (ED Mich, 2013), 2013 WL 5913660 (finding no prejudice where despite th e plaintiff’s learning of the sheriff’s sale two weeks beforehand, the plain tiff “took no action to redeem the property or to challenge the foreclosure until he filed the instant state court action . . . at least six months after learning of the impending foreclosure and just tw o weeks before the redemption period expired. Voiding a foreclosure is an equitable remedy a nd it is unavailable to a party who delays unduly in seeking relief”), citing, among others, Kim , 493 Mich at 121 (M ARKMAN , J., concurring).

6 Plaintiffs also cite Residential Funding Co, LLC v Saurman , 490 Mich 909, 910; 805 NW2d 183 (2011), which distinguishes betw een a party’s interest in inde btedness and a party’s interest in a note. However, as defendants observe, the a pplicable principle from Saurman is that “only the record holder of the mortgage ha s the power to foreclose . . . .” Id. at 910. As the successor in interest to the mortgagee by merger, PNC Bank was the proper foreclosing party.-8- Fourth, and most importantly, it is undisput ed that PNC Bank acqui red the property in a
full credit bid. A full credit bid is one that is “equal to the unpaid princi pal and inte rest on the mortgage plus the costs of foreclosure . . . .” New Freedom Mtg Corp v Globe Mtg Corp , 281 Mich App 63, 68; 761 NW2d 832 (2008). “When propert y is purchased at a foreclosure sale for an amount equal to the amount due on the mortgage, the debt is satisfied.” Emmons v Lake
States Ins Co , 193 Mich App 460, 463; 484 NW2d 712 ( 1992) (citation omitted). This means that “the mortgage is ex tinguished at the time of the foreclosure sale.” Bank of Three Oaks v Lakefront Properties , 178 Mich App 551, 555; 444 NW2d 217 (1989) . In other words, a debt is no longer owed on plaintiffs’ mortgage because the mortgage is gone. Id . Thus, irrespective of the identity of the note holder, plaintiffs no longer face any exposure on the mortgage.

Finally, we reject plainti ffs’ unpreserved argument that the notice of foreclosure was deficient under MCL 600.3212(a) (requiring a notice of foreclosure by advert isement to identify the mortgagor, original mortgagee, and foreclosi ng assignee, if any). C ontrary to plaintiffs’ argument, § 3212(a) requires that the re levant notice identify the foreclosing assignee , rather than the foreclosing entity as plaintiffs incorrectly claim. He re, the notice of foreclosure satisfied this requirement, properly identif ying the foreclosing assignee as National City Mortgage Co. Neither the recording nor notice requirements of the foreclosure by advertisement statute were
violated in this case.

Affirmed.

Defendants may tax costs, having prevailed in full. MCR 7.219.

/s/ William C. Whitbeck /s/ E. Thomas Fitzgerald /s/ Christopher M. Murray