Opinion ID: 2980641
Heading Depth: 3
Heading Rank: 3

Heading: Appeals to the District Court

Text: The Sutters filed a notice of appeal to the District Court for the Eastern District of Michigan, pursuant to 28 U.S.C. § 158 on March 7, 2008. In a memorandum opinion and order, the district court reversed the orders of the bankruptcy court and remanded for clarification. The district court relied on the finding of facts made by the bankruptcy court at the April 2007 hearing and concluded that the bankruptcy court made “an inference that the signatures had been forged.” Referencing Michigan law, the district court stated that “[w]here a deed is forged, those innocently acquiring interests under the forged deed are in no better position as to title than if they had purchased with notice.” The district court noted that the bankruptcy court had suggested, but did not definitively hold, that an equitable mortgage might exist on the Sutter property, and reversed and remanded for consideration of the equitable mortgage issue. This order was not appealed. On remand, after a hearing, the bankruptcy court imposed an equitable mortgage on the Sutter property. The court relied on the Sutters’ receipt of the benefits of the mortgage as the basis for imposing the equitable mortgage. The court also rejected the Sutters’ “unclean hands” argument on the theory that “[d]ebtors did not allege or prove that U.S. Bank or Saxon engaged in any improper conduct.” The Sutters appealed the bankruptcy court’s decision to the district court. The district court once again reversed the bankruptcy court, ruling that, because “no transfer ever occurred” as a result of the World Wide mortgage, the mortgage was void ab initio and there could be no equitable transfer of the interest to the trustee. This appeal followed. No. 10-1656 Sutter, et al. v. U.S. National Bank, et al. Page 6