Court Opinion

ID: 2759253
Source: CourtListenerOpinion
Date Created: 2014-12-10 16:07:35.539543+00
Date Added: 2024-06-11T12:24:34.342799
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

MANOUSHAG AL-RAEIS,                                                UNPUBLISHED
                                                                   December 9, 2014
                Plaintiff-Appellant,

v                                                                  No. 316269
                                                                   Oakland Circuit Court
AURORA BANK, FSB,                                                  LC No. 2012-128998-CH

                Defendant-Appellee.

Before: JANSEN, P.J., and TALBOT and SERVITTO, JJ.

PER CURIAM.

        This appeal arises from a foreclosure by advertisement by Aurora Bank, F.S.B.
(hereinafter “Aurora Bank”) on real property owned by Manoushag Al-Raeis, after which Aurora
Bank bought the property at a sheriff’s sale. The circuit court granted Aurora Bank summary
disposition pursuant to MCR 2.116(C)(8) because Al-Raeis failed to allege a fraud or irregularity
that prejudiced her, and she failed to seek a judicial determination regarding her claims before
the redemption period expired. Al-Raeis appeals as of right. We affirm.

         We review de novo a summary disposition ruling.1

         A court may grant summary disposition under MCR 2.116(C)(8) if “[t]he
         opposing party has failed to state a claim on which relief can be granted.” A
         motion brought under subrule (C)(8) tests the legal sufficiency of the complaint
         solely on the basis of the pleadings. When deciding a motion under (C)(8), this
         Court accepts all well-pleaded factual allegations as true and construes them in
         the light most favorable to the nonmoving party. A party may not support a
         motion under subrule (C)(8) with documentary evidence such as affidavits,
         depositions, or admissions. Summary disposition on the basis of subrule (C)(8)

1
    Dalley v Dykema Gossett PLLC, 287 Mich App 296, 304; 788 NW2d 679 (2010).

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          should be granted only when the claim “is so clearly unenforceable as a matter of
          law that no factual development could possibly justify a right of recovery.”[2]

“Whether a party has legal standing to assert a claim constitutes a question of law that we review
de novo.”3

       Al-Raeis contends that she had standing to bring this action to challenge the sheriff’s
sale. We disagree.

       Al-Raeis filed this action on August 28, 2012, just before the sheriff’s sale took place on
September 4, 2012, and before the statutory period of redemption expired. The redemption
period, however, expired thereafter on March 4, 2013, without redemption by Al-Raeis.
Nonetheless, Al-Raeis claims that the five-year limitation period of MCL 600.5801(1) applies.
MCL 600.5801(1) provides:

          When the defendant claims title to the land in question by or through some deed
          made upon the sale of the premises by an executor, administrator, guardian, or
          testamentary trustee; or by a sheriff or other proper ministerial officer under the
          order, judgment, process, or decree of a court or legal tribunal of competent
          jurisdiction within this state, or by a sheriff upon a mortgage foreclosure sale the
          period of limitation is 5 years.

Al-Raeis also cites Mfr Hanover Mtg Corp v Snell,4 in support of the proposition that a
homeowner may challenge a foreclosure sale after the redemption period has expired. In Snell,
this Court stated:

                   The Supreme Court has long held that the mortgagor may hold over after
          foreclosure by advertisement and test the validity of the sale in the summary
          [eviction] proceeding. Otherwise, the typical mortgagor who faces an invalid
          foreclosure would be without remedy, being without the financial means to pursue
          the alternate course of filing an independent action to restrain or set aside the
          sale.[5]

2
  Id. at 304-305 (citations omitted; alteration in original). Although Aurora Bank moved for
summary disposition pursuant to MCR 2.116(C)(8), it attached documentary evidence to its brief
in support of the motion. Nonetheless, the trial court’s ruling indicates that it did not consider
those documents, but relied solely on the pleadings. Thus, we review the motion pursuant to
MCR 2.116(C)(8).
3
    Heltzel v Heltzel, 248 Mich App 1, 28; 638 NW2d 123 (2001).
4
    142 Mich App 548; 370 NW2d 401 (1985).
5
    Id. at 553 (citations omitted; emphasis added).

                                                  -2-
        This case, however, did not involve summary eviction proceedings and we conclude that
this Court’s decision in Bryan v JPMorgan Chase Bank6 is applicable. In Bryan, this Court held
that a homeowner plaintiff lacked standing to contest the validity of foreclosure by advertisement
proceeding because the redemption period had expired.7 This Court stated:

                  Defendant argues that plaintiff lacked standing to bring this action because
          the statutory period of redemption had expired and plaintiff made no effort to
          redeem the property. We agree.

                  Pursuant to MCL 600.3240, after a sheriff’s sale is completed, a
          mortgagor may redeem the property by paying the requisite amount within the
          prescribed time limit, which here was six months. “Unless the premises described
          in such deed shall be redeemed within the time limited for such redemption as
          hereinafter provided, such deed shall thereupon become operative, and shall vest
          in the grantee therein named, his heirs or assigns, all the right, title, and interest
          which the mortgagor had at the time of the execution of the mortgage, or at any
          time thereafter . . . .” MCL 600.3236. If a mortgagor fails to avail him or herself
          of the right of redemption, all the mortgagor’s rights in and to the property are
          extinguished. Piotrowski v State Land Office Bd, 302 Mich 179, 187; 4 NW2d
          514 (1942).

                  We have reached this conclusion in a number of unpublished cases and,
          while unpublished cases are not precedentially binding, MCR 7.215(C)(1), we
          find the analysis and reasoning in each of the following cases to be compelling.
          Accordingly, we adopt their reasoning as our own. See Overton v Mtg Electronic
          Registration Sys, unpublished opinion per curiam of the Court of Appeals, issued
          May 28, 2009 (Docket No. 284950), p 2 (“The law in Michigan does not allow an
          equitable extension of the period to redeem from a statutory foreclosure sale in
          connection with a mortgage foreclosed by advertisement and posting of notice in
          the absence of a clear showing of fraud, or irregularity. Once the redemption
          period expired, all of plaintiff’s rights in and title to the property were
          extinguished.”) (citation and quotation marks omitted); Hardwick v HSBC Bank
          USA, unpublished opinion per curiam of the Court of Appeals, issued July 23,
          2013 (Docket No. 310191), p 2 (“Plaintiffs lost all interest in the subject property
          when the redemption period expired . . . . Moreover, it does not matter that
          plaintiffs actually filed this action one week before the redemption period ended.
          The filing of this action was insufficient to toll the redemption period. . . . Once
          the redemption period expired, all plaintiffs’ rights in the subject property were
          extinguished.”); BAC Home Loans Servicing, LP v Lundin, unpublished opinion
          per curiam of the Court of Appeals, issued May 23, 2013 (Docket No. 309048), p
          4 (“[O]nce the redemption period expired, [plaintiff’s] rights in and to the

6
    304 Mich App 708; 848 NW2d 482 (2014).
7
    Id. at 713-715.

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          property were extinguished. . . . Because [plaintiff] had no interest in the subject
          matter of the controversy [by virtue of MCL 600.3236], he lacked standing to
          assert his claims challenging the foreclosure sale.”); Awad v Gen Motors
          Acceptance Corp, unpublished opinion per curiam of the Court of Appeals, issued
          April 24, 2012 (Docket No. 302692), pp 5-6 (“Although she filed suit before
          expiration of the redemption period, [plaintiff] made no attempt to stay or
          otherwise challenge the foreclosure and redemption sale. Upon the expiration of
          the redemption period, all of [plaintiff’s] rights in and title to the property were
          extinguished, and she no longer had a legal cause of action to establish
          standing.”). We hold that by failing to redeem the property within the applicable
          time, plaintiff lost standing to bring her claim.[8]

       Accordingly, because Al-Raeis allowed the statutory redemption period to lapse without
redeeming her interest in the property,9 she lacked standing to challenge the propriety of the
foreclosure proceeding, absent a clear showing of fraud or irregularity.10 Further, Al-Raeis could
only set aside the foreclosure sale if she was prejudiced by the defects or irregularities in the
foreclosure proceedings.11

        Al-Raeis also argues that there were two defects in the foreclosure process that caused
her actual prejudice. We disagree.

        First, Al-Raeis claims that there was a violation of MCL 600.3204(3) because the
assignments were a nullity causing a chain of title defect. According to Al-Raeis, the
assignments of the mortgage were not accompanied by the promissory note and assigned nothing
but the beneficial interest, which did not exist. Thus, Al-Raeis asserts that Aurora Bank did not
have authority to foreclose under MCL 600.3204(1)(d). According to Al-Raeis, Article 3 of the
Uniform Commercial Code (UCC),12 and Article 9 of the UCC,13 demand that a party seeking to
enforce or negotiate a promissory note actually possess the note. Al-Raeis insists that in this
case there is no evidence that Aurora Bank or its assignor ever possessed the note, rendering the
foreclosure invalid.

8
    Id. (alterations in original; emphasis added).
9
  We note that while Al-Raeis did make some attempt to stay the foreclosure, her motion was
never heard, and the trial court stated: “[Al-Raeis] made no other apparent effort to have the
sheriff’s sale set aside before the redemption period expired on March 4, 2013.”
10
   See id. See also Sweet Air Investment, Inc v Kenney, 275 Mich App 492, 497; 739 NW2d 656
(2007) (“The Michigan Supreme Court has held that it would require a strong case of fraud or
irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside.”) (citation and
quotation marks omitted).
11
     See Kim v JPMorgan Chase Bank, NA, 493 Mich 98, 115-116; 825 NW2d 329 (2012).
12
     MCL 440.3101 et seq.
13
     MCL 440.9101 et seq.

                                                     -4-
       The version of MCL 600.3204 in effect at the time of the sheriff’s sale provided, in
relevant part:

                  (1)   Subject to subsection (4), a party may foreclose a mortgage by
          advertisement if all of the following circumstances exist:

                                                  ***

                  (d)    The party foreclosing the mortgage is either the owner of the
          indebtedness or of an interest in the indebtedness secured by the mortgage or the
          servicing agent of the mortgage.

                                                  ***

                  (3)    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
          section 3216 evidencing the assignment of the mortgage to the party foreclosing
          the mortgage.

        In Residential Funding Co, LLC v Saurman,14 the Michigan Supreme Court concluded
that to constitute a proper foreclosing party under MCL 600.3204(1)(d), the party need not have
an ownership interest in the promissory note underlying a mortgage. The Court stated:

                    As the Court of Appeals dissenting opinion explained, “pursuant to MCL
          600.3204(1)(d), Mortgage Electronic Registration System (MERS) is ‘the owner
          . . . of an interest in the indebtedness secured by the mortgage’ at issue in each of
          these consolidated cases” because “[MERS’] contractual obligations as mortgagee
          were dependent upon whether the mortgagor met the obligation to pay the
          indebtedness which the mortgage secured.” We clarify, however, that MERS’
          status as an “owner of an interest in the indebtedness” does not equate to an
          ownership interest in the note. Rather, as record-holder of the mortgage, MERS
          owned a security lien on the properties, the continued existence of which was
          contingent upon the satisfaction of the indebtedness. This interest in the
          indebtedness—i.e., the ownership of legal title to a security lien whose existence
          is wholly contingent on the satisfaction of the indebtedness—authorized MERS to
          foreclose by advertisement under MCL 600.3204(1)(d).[15]

The Court further stated that “mortgagees of record [are] among the parties entitled to foreclose
by advertisement.”16

14
     490 Mich 909; 805 NW2d 183 (2011).
15
     Id. at 909 (citation omitted; alteration in original; emphasis added).
16
     Id. at 910.

                                                   -5-
        Accordingly, the circuit court properly rejected Al-Raeis’s contention that Aurora Bank
could not foreclose by advertisement without any interest in the related promissory note.
Moreover, Al-Raeis, as a third party, is precluded from challenging the validity of the
assignments.17 Because Al-Raeis failed to properly dispute that “a record chain of title” exists
“evidencing the assignment of the mortgage to the party foreclosing the mortgage,” Aurora Bank
qualifies as a proper foreclosing party under MCL 600.3204(3).

        Al-Raeis’s suggestion that the UCC applies to a mortgage transaction, including in the
context of a foreclosure by advertisement, is unfounded. The UCC prescribes that the
negotiation of an instrument “payable to an identified person . . . requires transfer of possession
of the instrument and its endorsement by the holder.”18 However, “[a] mortgage instrument is
not a negotiable instrument . . . .”19 Regarding Al-Raeis’s reference to Article 9, MCL
440.9109(4)(k) provides that Article 9 “does not apply to . . . . [t]he creation or transfer of an
interest in or lien on real property . . . .”

        Second, Al-Raeis claims that MCL 600.3204(4)20 was violated because she was not
allowed to modify her loan even though she was eligible and qualified. Al-Raeis asserts that
Aurora Bank failed to comply with the statutory loan modification procedures, which entitled her
to pursue a judicial foreclosure and set aside Aurora Bank’s sheriff’s deed. The trial court found
that Al-Raeis did not allege or present evidence that she complied with the loan modification
process or that she was eligible for a modification. Al-Raeis’s complaint did, however, allege
that she failed to receive notice of the foreclosure sale, she had been trying to obtain a loan
modification, and Aurora Bank refused to negotiate. Even if we were to accept Al-Raeis’s
allegations as true, the circuit court correctly characterized as moot Al-Raeis’s claim of
entitlement to a judicial foreclosure.21 Although Al-Raeis filed the complaint requesting a
conversion of the foreclosure by advertisement into a judicial foreclosure, the circuit court
accurately observed that Al-Raeis did not file a motion or otherwise show that she satisfied the
conditions contained in MCL 600.3205c(8)22 before the redemption period ended. Thus, Al-

17
  See Bowles v Oakman, 246 Mich 674, 678; 225 NW 613 (1929); Woods v Ayres, 39 Mich 345
(1878).
18
     MCL 440.3201(2).
19
   Mox v Jordan, 186 Mich App 42, 46; 463 NW2d 114 (1990) (citing former MCL
440.3104(1)(b)).
20
  MCL 600.3204 was amended, removing subsection (4), effective June 19, 2014. See 2014 PA
125.
21
   People v Richmond, 486 Mich 29, 34-35; 782 NW2d 187 (2010), reh gtd in part 486 Mich
1041 (2010), amended 784 NW2d 204 (2010) (describing a moot case as one that “seeks to get a
judgment on a pretended controversy, when in reality there is none, . . . or a judgment upon some
matter which, when rendered, for any reason, cannot have any practical legal effect upon a then
existing controversy”) (citation and quotation marks omitted).
22
  The Legislature also repealed this section, effective June 30, 2013. See 2014 PA 521.
Subsection 3205c(8) formerly provided:

                                                -6-
Raeis failed to avail herself of the only remedy available for violation of the mortgage
modification statute and cannot challenge the modification process after the sheriff’s sale was
completed. Given Al-Raeis’s failure to allege any defects or irregularities that prejudiced her,
the trial court properly dismissed the case for failing to state a claim on which relief may be
granted.23

         Affirmed.

                                                              /s/ Kathleen Jansen
                                                              /s/ Michael J. Talbot
                                                              /s/ Deborah A. Servitto

                 If a mortgage holder or mortgage servicer begins foreclosure proceedings
         under this chapter in violation of this section, the borrower may file an action in
         the circuit court for the county where the mortgaged property is situated to
         convert the foreclosure proceeding to a judicial foreclosure. If a borrower files an
         action under this section and the court determines that the borrower participated in
         the process under section 3205b, a modification agreement was not reached, and
         the borrower is eligible for modification under subsection (1), and subsection (7)
         does not apply, the court shall enjoin the foreclosure of the mortgage by
         advertisement and order that the foreclosure proceed under chapter 31.
23
     See MCR 2.116(C)(8).

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