Court Opinion

ID: 2775015
Source: CourtListenerOpinion
Date Created: 2015-01-30 14:05:15.183456+00
Date Added: 2024-06-11T12:19:21.598432
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

JPMORGAN CHASE BANK, N.A.,                                           UNPUBLISHED
                                                                     January 29, 2015
               Plaintiff-Appellee,

v                                                                    No. 318763
                                                                     Oakland Circuit Court
FIRST MICHIGAN BANK and PEOPLES                                      LC No. 2011-118087-CH
STATE BANK,

               Defendants-Appellees,
and

KAYS ZAIR and PATRICE ZAIR,

               Defendants-Appellants.

Before: SHAPIRO, P.J., and GLEICHER and RONAYNE KRAUSE, JJ.

PER CURIAM.

       This case began as a priority dispute between two mortgagees regarding the real property
of defendants Kays and Patrice Zair. After one mortgagee successfully foreclosed, the other
filed suit. The mortgagees reached an agreement and the circuit court entered a consent
judgment at their request. The Zairs appealed and had the judgment set aside based on the
mortgagees’ failure to secure their consent as well. Following that appeal, the plaintiff
mortgagee decided it no longer wanted to pursue its priority claim and sought voluntary
dismissal of this action. The circuit court granted that request, dismissing the action without
prejudice and without costs to any defendant. The Zairs’ contention that the circuit court should
have imposed limitations on the voluntary dismissal is without merit and we affirm.

                                        I. BACKGROUND

        Kays and Patrice Zair had two mortgages on their residential property: (1) a $250,000
mortgage loan from Peoples State Bank (PSB) that was recorded in 2002, and (2) a $1,321,000
mortgage loan with JPMorgan Chase Bank (Chase) that was recorded in 2007. The banks
disputed whether PSB signed an effective subordination agreement making its first-recorded lien
junior to that of Chase. At some point, the Zairs stopped making payments on both their
mortgage loans. As a result PSB foreclosed on March 30, 2010. PSB placed the winning bid at
the sheriff’s sale and recorded its sheriff’s deed. The Zairs did not redeem the property within six

                                                -1-
months as required by MCL 600.3240(8), but negotiated an option agreement that would allow
the Zairs’ daughter, Tiffany Zair, to purchase the home free and clear from PSB for $850,000.
However, Tiffany never signed the option agreement, which expired on October 31, 2010. The
agreement was therefore rendered “null and void.”1 In February 2011, First Michigan Bank
(First Michigan)2 purchased PSB’s interest in the property.

        On March 29, 2011, Chase filed suit against First Michigan and PSB to resolve the
priority dispute. Chase named the Zairs in the complaint, but claimed that it did so for notice
purposes only. First Michigan and Chase subsequently reached an agreement under which First
Michigan would set aside the foreclosure and sheriff’s deed. The banks filed a consent judgment
to this effect. The Zairs objected, but the circuit court ruled that the Zairs had no interest in the
property and were named in the complaint for notice purposes only. As the Zairs were not truly
interested parties, the court determined that their consent was unnecessary to the entry of the
judgment.

       The Zairs appealed and this Court reversed the entry of the consent judgment, holding:

              Chase and First Michigan assert that the judgment actually benefited the
       Zairs. However, any beneficial effect of the judgment on the Zairs is not a matter
       for the Zairs’ creditors to decide. Even if it could be established that from a
       pecuniary perspective, the Zairs gain from the restoration of their property rights
       and accompanying liens, that evaluation does not eliminate the necessity of
       obtaining their consent to the purported consent order.

               We reject the related arguments by Chase and First Michigan that the
       Zairs are not “aggrieved” by the order . . . . To be aggrieved by a judgment, a
       party must have a legal right that was invaded, or some interest of a pecuniary
       nature in the outcome of the case, and not a mere possible interest arising from
       some unknown and future contingency. Here, the purported consent order voided
       the sheriff’s sale. This restored the Zairs’ interest in the property and also
       restored liens against the property that had been extinguished. The Zairs have a
       pecuniary interest related to the restoration of their property rights and the liens
       against the property. . . . [JPMorgan Chase Bank, NA v First Michigan Bank,
       unpublished opinion per curiam of the Court of Appeals, issued June 27, 2013
       (Docket No. 309857), unpub op at 2-3 (citation omitted) (Chase I).]

       While the prior appeal was pending, the PSB/First Michigan foreclosure and sheriff’s
deed had been set aside and property rights automatically returned to the Zairs. Chase took the

1
 The Zairs insist that Tiffany exercised her option to purchase the property. However, the lower
court record contains no signed copy of the option agreement and no evidence that any funds
were paid toward the purchase of the property.
2
  First Michigan is now known as “Talmer Bank.” The parties never changed First Michigan’s
title in the lower court or appellate clerk’s office.

                                                -2-
opportunity to foreclose on the property. It was the successful bidder at the sheriff’s sale and
recorded its deed in 2012. The Zairs filed suit against Chase, alleging that the redemption period
under the Chase mortgage should be extended to allow their appeal in Chase I. The Zairs further
raised challenges to the foreclosure proceedings based on Chase’s failure to recognize the Zairs’
qualification for a mortgage modification.

        The circuit court summarily dismissed the Zairs’ claims and imposed sanctions against
them. The Zairs appealed that decision to this Court. After the resolution of Chase I, Chase and
the Zairs filed a joint circuit court motion to vacate that court’s judgment in the Zairs’ lawsuit,
but the circuit court refused. The parties also submitted a joint motion to vacate the lower court
judgment in the pending Zair appeal. Given the reversal in Chase I, Chase conceded that it was
proper to set aside its foreclosure sale and withdraw its filed sheriff’s deed. This Court agreed
and entered an order vacating the lower court judgment. Zair v JPMorgan Chase Bank, NO,
unpublished order of the Court of Appeals, entered September 9, 2013 (Docket No. 315074)
(Zair).

       The proceedings on remand after Chase I are now at issue. Chase decided to voluntarily
dismiss its lawsuit on remand. This decision would leave intact the First Michigan/PSB
foreclosure and sheriff’s deed. First Michigan concurred in this motion.

        The Zairs opposed the voluntary dismissal motion without prejudice and without costs
and attorney fees. The Zairs contended that voluntary dismissal would deprive them of their
right “to fully vindicate their rights after incurring thousands of dollars in legal fees and over two
years of aggravation.” They further contended that Chase only sought voluntary dismissal
because “its prospects of obtaining a favorable judgment . . . were slim or non-existent.”
Accordingly, the Zairs requested that the dismissal be granted with prejudice and after awarding
their costs and fees.

        At the October 2013 hearing on this matter, the parties agreed that the only issue before
the court was the Zairs’ “claim that they are entitled to full fees and costs based on this motion.”
Chase argued that the Zairs’ property rights had been lost during the PSB foreclosure proceeding
and had never been restored. Yet, the Zairs were trying to “raise claims related to the property
that had never been made before in this Court during the pendency of the underlying case.”
While the Zairs asserted that “they stand on the cusp of prevailing in this lawsuit,” all they
sought was “a finding that the [First Michigan/PSB] mortgage had priority.” And that was
exactly the relief that would remain after Chase’s lawsuit was voluntarily dismissed. Chase
further noted that Chase I made no discussion of the merits of the case, and was based solely on
the procedural issue of whether the Zairs were an interested party that had to stipulate to the
consent judgment. Accordingly, there was no appellate decision that the Zairs had been harmed.

        The Zairs’ attorney noted that they had no objection to dismissing in relation to First
Michigan. They did, however, object to any dismissal of Chase’s claims without prejudice and
without costs. Counsel conceded that the Court of Appeals had not awarded the Zairs costs or
fees, but made no further elaboration on the defense arguments.

       Ultimately, the circuit court granted the voluntary dismissal without prejudice and
without costs. This appeal followed.

                                                 -3-
                                         II. ANALYSIS

        MCR 2.504(A) is the court rule governing the voluntary dismissal of actions. It provides
in relevant part:

         (2) By Order of Court. Except as provided in subrule (A)(1), an action may not
       be dismissed at the plaintiff’s request except by order of the court on terms and
       conditions the court deems proper.

          (a) If a defendant has pleaded a counterclaim before being served with the
       plaintiff’s motion to dismiss, the court shall not dismiss the action over the
       defendant’s objection unless the counterclaim can remain pending for
       independent adjudication by the court.

          (b) Unless the order specifies otherwise, a dismissal under subrule (A)(2) is
       without prejudice. [Emphasis added.]

        “Under MCR 2.504(A)(2), an action may not be dismissed at the plaintiff’s request
except by order of the court on terms and conditions the court deems proper.” Walbridge
Aldinger Co v Walcon Corp, 207 Mich. App. 566, 570; 525 NW2d 489 (1994). We review a trial
court’s decision on a motion for voluntary dismissal “to see whether the decision was without
justification.” Id. The trial court has discretion to grant a voluntary dismissal motion but “in
exercising that discretion the trial judge is to weigh the competing interests of the parties along
with any resultant inconvenience to the court from further delays.” African Methodist Episcopal
Church v Shoulders, 38 Mich. App. 210, 212; 196 NW2d 16 (1972). “Normally, such a motion
should be granted unless defendant will be legally prejudiced as a result. As the purpose of [the
court rule] is to protect defendant from the abusive practice of dismissal after much time and
effort has been put into a lawsuit, any dismissal should be on terms and conditions which protect
defendant.” Id. (citation omitted, emphasis in original). See also Makuck v McMullin, 87 Mich
App 82, 85; 273 NW2d 595 (1978) (“[T]he court should dismiss an action only if no prejudice to
defendant will result.”). And voluntary dismissal should not be granted simply to permit the
plaintiff to avoid losing its suit. See McLean v McElhaney, 269 Mich. App. 196, 202-203; 711
NW2d 775 (2005), rev’d on other grounds 480 Mich. 978 (2007); Rosselott v Muskegon Co, 123
Mich. App. 361, 375-376; 333 NW2d 282 (1983).

       We discern no abuse of discretion in the circuit court’s decision to grant Chase’s
voluntary dismissal motion without engrafting “terms and conditions” to benefit the Zairs. The
Zairs cannot establish that they will be prejudiced as a result of the voluntary dismissal. See
Makuck, 87 Mich. App. at 85; African Methodist, 38 Mich. App. at 212. First and foremost, the
Zairs no longer have an interest to protect in the subject property. A person’s “rights to
[disputed] property [are] extinguished when the redemption period expire[s] and the foreclosure
bec[omes] final.” Ruby & Assocs, PC v Shore Fin Servs, 480 Mich. 1107; 745 NW2d 752
(2008). See also Al-Raeis v Aurora Bank, FSB, ___ Mich App ___; ___ NW2d ___ (Docket No.
316269, issued December 9, 2014), slip op at 3-4, citing Bryan v JPMorgan Chase Bank, 304
Mich. App. 708, 713-715; 848 NW2d 482 (2014). The Zairs failed to challenge the PSB
foreclosure before the end of the redemption period—September 30, 2010. Absent “a clear
showing of fraud” or an allegation of irregularity in the proceedings, a timely challenge is

                                                -4-
required or the mortgagor forever loses his or her property rights and the right to challenge the
foreclosure procedure. Al-Raeis, slip op at 3-4, quoting Bryan, 304 Mich. App. at 713-714.
Accordingly, by the time Chase filed its lawsuit in March 2011, as the Zairs had raised no
allegations of fraud or irregularity, the Zairs had no property right to vindicate.

        This Court’s opinion in Chase I does not demand a different result. Prior to the Chase I
appeal, Chase and First Michigan reached an agreement that Chase’s mortgage should take
priority. As a result, the circuit court entered an order setting aside the PSB/First Michigan
foreclosure and sheriff’s deed. At that time, the property rights naturally returned to the Zairs.
This was not completely beneficial to the Zairs, because Chase’s much larger lien was revived.
This Court did not express any thoughts on the underlying priority dispute or the validity of the
foreclosure process. Rather, this Court merely stated that Chase and PSB/First Michigan could
not enter a consent judgment without the Zairs’ input and agreement because reviving their
property interest and the Chase lien affected their interests. Chase I, unpub op at 3.

       As a result of Chase I, the Chase lien was again extinguished and the PSB/First Michigan
foreclosure and sheriff’s deed were restored. The Zairs again found themselves with no interest
in the property. Accordingly, the Zairs had nothing left to vindicate when Chase sought to
discontinue its priority battle and to allow First Michigan to keep the property at Chase’s
expense.

         The Zairs raised no actual argument in connection with the Option Agreement they
attached to their response to Chase’s voluntary dismissal motion. The Zairs imply, however, that
if the lawsuit had not been dismissed, they could have raised the document as a defense to any
claim by PSB/Michigan. “An option is basically an agreement by which the owner of the
property agrees with another that he shall have a right to buy the property at a fixed price within
a specified time.” In re Egbert R Smith Trust, 480 Mich. 19, 25; 745 NW2d 754 (2008)
(quotation marks and citation omitted). It is a contract, “an enforceable promise not to revoke an
offer.” Id. (quotation marks and citation omitted). Here, the property owner (then PSB)
promised “another,” Tiffany Zair, that it would sell the property to Tiffany for $850,000. Kays
and Patrice Zair were not parties to this contract. Moreover, Tiffany did not act within the
“specified time”—by October 31, 2010. Once the option period expires, the property owner no
longer must honor it and can transfer the property interest to others. Id. at 26. PSB’s rights were
made even clearer in the subject Option Agreement because that document specifically indicates
that Tiffany’s failure to exercise the option by the expiration date renders the agreement null and
void. The Zairs cannot defend against or challenge PSB/First Michigan’s foreclosure with a null
and void option agreement to which they were never parties.

       Contrary to the Zairs’ challenge, the voluntary dismissal was not entered to permit Chase
to avoid a negative result at trial. See McLean, 269 Mich. App. at 202-203; Rosselott, 123 Mich
App at 375-376. The only claim raised by Chase was against PSB/First Michigan. Chase sought
to identify which bank’s lien had priority. The lower court record includes a signed
subordination agreement, which Chase sought to enforce. Although PSB/First Michigan argued
at one time that Chase never provided necessary consideration to give the subordination
agreement effect, it clearly changed its position by agreeing prior to Chase I to enter a consent
judgment giving the Chase lien priority. PSB/First Michigan’s change of heart could have been
based on the evidence reviewed during discovery, convincing them that they would not be

                                                -5-
successful at trial. Chase’s decision to abandon its lawsuit after Chase I and Zair is also not a
reflection on the merits of the case. The evidence still could have supported the priority of
Chase’s lien; however, Chase could have conducted a cost-benefit analysis and decided it no
longer wanted to pursue its rights in this case.

        And no terms or conditions were required to protect the Zairs. See African Methodist, 38
Mich. App. at 212. The Zairs’ position is “no worse than before the circuit court action.”
McKelvie v City of Mount Clemens, 193 Mich. App. 81, 86; 483 NW2d 442 (1992). Before Chase
filed suit, the Zairs had no property interest. That property interest was briefly restored during
the proceedings. However, the Zairs had done nothing during the proceedings to restore their
property rights permanently. For example, the Zairs made no attempt to redeem their property
and have never challenged the propriety of the PSB foreclosure process. Accordingly, the Zairs
ended the lawsuit in the same position as they began, holding over on property on which they
had no legal right to reside. And it was the Zairs’ decision to incur any legal fees. They did not
need to take part in the priority dispute. They chose to do so, filed an appeal, and extended the
proceedings, only to reach a point where they had absolutely no defense to restore their property
rights. Chase did not cause the Zairs’ legal fees and costs, they brought those fees on
themselves.

       We affirm. Appellees, as the prevailing parties, may tax costs pursuant to MCR 7.219.

                                                            /s/ Douglas B. Shapiro
                                                            /s/ Elizabeth L. Gleicher
                                                            /s/ Amy Ronayne Krause

                                               -6-