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Wilmington Savings Fund Society, FSB v. Clare

Court of Appeals of Michigan

April 19, 2018

WILMINGTON SAVINGS FUND SOCIETY, FSB, doing business as CHRISTINA TRUST, as Trustee for CARLSBAD FUNDING MORTGAGE TRUST, by its Servicer, RUSHMORE LOAN MANAGEMENT SERVICES, LLC, Plaintiff-Appellant,
v.
ROGER DUANE CLARE and NANCY JO CLARE, Defendants-Appellees, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendant.

          Saginaw Circuit Court LC No. 15-025725-CH

          Before: Stephens, P.J., and Shapiro and Ronayne Krause, JJ.

          PER CURIAM.

         Defendants purchased a house financed through a mortgage issued by plaintiff's privy.[1]The mortgagee foreclosed on the mortgage due to non-payment. Following an unsuccessful action for possession, plaintiff filed this action to set aside the foreclosure, reinstate the mortgage, and to obtain judicial foreclosure. The trial court granted the mortgagors and the current occupants of the property, defendants Roger and Nancy Clare (defendants), summary disposition under MCR 2.116(C)(10) (no genuine issue of material fact). Plaintiff appeals by right. We affirm in part and remand for proceedings consistent with this opinion.

         I. PERTINENT FACTS

         The material facts in this case are not in dispute. Defendants executed a mortgage on real property located in Hemlock, Michigan, in favor of Mortgage Electronic Registration System (MERS), as nominee for Quicken Loans, Inc. The mortgage secured a $250, 600 loan from Quicken Loans to defendant Roger Clare. In May 2009, the mortgage was assigned to OneWest Bank, FSB. In August 2010, OneWest initiated foreclosure-by-advertisement proceedings against the property. In November 2010, after a sheriff's sale, a sheriff's deed was granted to OneWest, subject to a 12-month redemption period. In December 2010, OneWest quitclaimed the property to the Federal National Mortgage Association (Fannie Mae). In November 2011, the redemption period expired.

         Shortly thereafter, Fannie Mae commenced district court eviction proceedings against defendants for possession of the property. In March 2012, the case proceeded to a bench trial. At the close of Fannie Mae's proofs, defendants moved for a directed verdict, which the court granted. An order dismissing the case with prejudice was entered on March 5, 2012. Fannie Mae appealed the district's court ruling to the circuit court, which concluded that the basis for the district court's decision was not clear, and remanded with direction that the district court make findings of fact and conclusions of law. On December 18, 2012, the district court issued its opinion on remand, which stated that Fannie Mae "has failed to show that title to the property was properly passed to it, the proofs being of a hearsay nature, without full documentation regarding the chain of title. . . . No evidence was presented from the prior title holders showing a valid transfer of title to the plaintiff." Fannie Mae did not appeal the district court's ruling on remand.

         A year and a half later, in September 2014, Ocwen Loan Servicing, LLC, acting as attorney-in-fact for OneWest, the last party to hold the mortgage prior to the sheriff's sale, recorded what the parties refer to as an "expungement affidavit" in Saginaw County. The affidavit read in pertinent part:

5. That OneWest Bank, FSB agrees to set aside the above Sheriff's Deed, making it void and of no force or effect, thus reinstating and reviving the above mortgage and Note, as if the foreclosure had not occurred. Additionally, any conveyance made subsequent and pursuant to the Sheriff's Deed is likewise set aside, making it void and of no force and effect. The foreclosure sale, Sheriff's Deed, and any subsequent conveyance are being set aside pursuant to an order issued by the 70th Judicial Court of the State of Michigan under Case No. 11-2817-LT.
* * *
7. That the mortgage referenced in Paragraph 2 above is hereby reinstated and is again in full force and effect.

         In October 2014, OneWest assigned the mortgage to Ocwen.

         In February 2015, Ocwen filed the instant action in circuit court seeking a determination of interests in land and a judicial foreclosure. After the suit was filed, the mortgage was assigned at least twice, the last one being an assignment to plaintiff. Plaintiff asserted that the 2010 sheriff's sale was voided by the expungement affidavit and that as a result, the mortgage should be reinstated with the parties back in the positions they were in prior to the sheriff's sale. Plaintiff requested that the trial court enter a judgment invalidating the sheriff's sale, rescinding the sheriff's deed, reinstating the mortgage, and granting judicial foreclosure of the property. In the alternative, plaintiff sought to amend its complaint to add claims of equitable mortgage and unjust enrichment.

         The trial court issued a written opinion and order granting defendants' motion for summary disposition pursuant to MCR 2.116(C)(10). As an initial matter, the court concluded that the suit was not barred by res judicata or collateral estoppel arising out of the 2012 district court case. Neither party has asserted that this was error. The trial court also concluded that plaintiff lacked standing because it no longer had any interest in the property as the mortgage had been extinguished and the expungement affidavit was without effect. Lastly, it denied plaintiff's motion for leave to amend its complaint on the ground that the proposed amendment "would do nothing to correct the standing defect, " and therefore, any such amendment would be futile.

         II. LEGAL ANALYSIS

         Plaintiff raises three issues on appeal. First, that the trial court erred by concluding that plaintiff lacked standing. Second, that the court erred by finding that the expungement affidavit was without effect. Third, that the court erred by not allowing plaintiff to amend its complaint. We agree with plaintiff that it had standing to bring its action, however, we affirm the trial court's ruling that the expungement affidavit has no legal effect and that as a result, plaintiff's claim based on the mortgage fails as a ...


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