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Nationstar Mortgage LLC v. B&M Acquisitions, LLC

United States District Court, E.D. Michigan, Southern Division

April 24, 2018



          Paul D. Borman United States District Judge

         This is a residential mortgage case involving the circumstance of a borrower who cured a default before the sheriff's sale of the mortgaged property occurred. The Plaintiff, Nationstar Mortgage LLC, d/b/a Mr. Cooper (“Nationstar” or “Plaintiff”), the entity who holds the mortgage on the property, submits that the sheriff's sale of the property should not have occurred given the borrower's complete cure of the default before the sale and seeks to have the sheriff's sale set aside and title to the property returned to the borrower. Presently before the Court is Nationstar's motion to toll the redemption period until the third party purchaser of the property, B&M Acquisitions, LLC (“B&M”), can be served with process of the Complaint. As Nationstar has been unsuccessful in its efforts to serve B&M, Nationstar seeks also to extend the summons and obtain an order permitting it to attempt service on B&M through alternate means. The motions are unopposed.

         The Court held a hearing on the motions on March 21, 2018. For the reasons that follow, the Court GRANTS the motion to toll the redemption period and tolls the redemption period pending further Order of this Court, and GRANTS the motion for alternate service and to issue a second summons.


         This action concerns a residential mortgage foreclosure by advertisement sale that, according to the Plaintiff who holds the mortgage, occurred in error. (ECF No. 6, Pl.'s Mot. to Toll ¶ 1, PgID 166.) Plaintiff's Complaint asks this Court to: (1) void the Sheriff's sale and resultant Sheriff's Deed on Mortgage Sale because the mortgagor was not in default at the time of the sale, having cured the default by reinstating the mortgage and curing the default prior to the sale, and to rescind the foreclosure sale (Count III); (2) direct the Defendant Washtenaw County Sheriff to hold the funds submitted to it in the amount $256, 151.53, pending a determination by this Court as to the proper distribution of surplus funds (Counts I and II). (ECF No. 1, Notice of Removal, Complaint PgID 16.)

         On March 8, 2018, the Plaintiff and Defendants Washtenaw County and the Washtenaw County Sheriff's Department entered into a “Compliance Agreement and Stipulated Order of Dismissal of Defendants Washtenaw County and Washtenaw County Sheriff's Department, Only.” (ECF No. 10, Compliance Agreement.) The Compliance Agreement explains that the successful purchaser at the sheriff's sale, B&M, obtained the property with a bid amount of $256, 151.53, which “exceeded the mortgage debt and original bid amount by $27, 000.” (Compliance Agreement ¶¶ 3-5.) The Compliance Agreement provides that Washtenaw County and the Washtenaw County Sheriff's Department are in possession “of at least part of the purchase amount, specifically the surplus funds in the amount of $27, 000.” (Compliance Agreement ¶ 6.)

         The Compliance Agreement further provides that Washtenaw County will cooperate with the Plaintiff in determining to whom the surplus funds belong and will abide by any Order of this Court regarding distribution of the funds that it holds. (Compliance Agreement ¶¶ 7-10.) Washtenaw County and the Washtenaw County Sheriff's Department have been dismissed from this case without prejudice. (Id.)

         The Sheriff's sale took place on November 16, 2017, and Defendant B&M was the successful purchaser at the sale. (ECF No. 6, Pl.'s Mot. to Toll ¶ 4, PgID 166-67, Ex. A, Sheriff's Deed.) Prior to the November 16, 2017, sheriff's sale, the mortgagor (Defendant Rosemarie Demyan)[1] requested a Reinstatement Quote, which was good through November 15, 2017. On November 15, 2017, the day before the foreclosure sale took place, the mortgagor, as was her contractual right pursuant to the Mortgage, reinstated the Mortgage Loan. (Id. ¶¶ 5-6, PgID 167, Ex. B, Jan. 11, 2018 Affidavit of Nationstar.) Nationstar submits that the circumstance of a borrower not being in default at the time of the foreclosure sale has been considered by Michigan courts as an irregularity in the foreclosure process that supports setting aside the foreclosure sale, that this sheriff's sale should not have occurred, and that no legal title was obtained as result of the foreclosure. (Id. ¶¶ 3, 7.)

         Plaintiff originally filed this motion in state court, but the matter was removed to this Court pursuant to 28 U.S.C. § 1442(a)(1) by the United States, who was first served with the Summons and Complaint on February 13, 2018, on February 27, 2018. (ECF No. 1, Notice of Removal.)[2] The issue prompting the instant motion to toll is that the redemption period in this matter expires on May 16, 2018, after which the mortgagor loses all right, title, and interest in the property and bringing a claim to set aside the foreclosure sale becomes more difficult (if not impossible) for the mortgagor. (Id. ¶¶ 8-9.) While this date is still some time away, the removal by the United States and its request for extension of time to respond, along with the difficulties that Plaintiff has faced in serving B&M, the third-party purchaser at the foreclosure sale, have created the potential for the redemption period to expire before this matter is settled. (Id. ¶ 10.)

         II. ANALYSIS

         A. Plaintiff's Motion for TRO/To Toll the Redemption Period

         Plaintiff presents its motion seeking to toll the redemption period as a motion for a temporary restraining order/preliminary injunction to preserve the status quo until the litigation is complete. (ECF No. 6, Mot. to Toll at 13, PgID 177.) A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 24 (2008) (citation omitted). Plaintiff bears the burden of demonstrating entitlement to preliminary injunctive relief and the burden is substantial. Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000). Such relief will only be granted where “the movant carries his or her burden of proving that the circumstances clearly demand it.” Overstreet v. Lexington-Fayette Urban County Gov't, 305 F.3d 566, 573 (6th Cir. 2002). When considering a motion for injunctive relief, the Court must balance the following factors: (1) whether the movant has a strong likelihood of success on the merits, (2) whether the movant would suffer irreparable injury absent preliminary injunctive relief, (3) whether granting the preliminary injunctive relief would cause substantial harm to others, and (4) whether the public interest would be served by granting the preliminary injunctive relief. Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 542 (6th Cir. 2007). “These factors are not prerequisites, but are factors that are to be balanced against each other.” Overstreet, 305 F.3d at 573. These same factors are considered in evaluating whether to issue a temporary restraining order. Ohio Republican Party v. Brunner, 543 F.3d 357, 361 (6th Cir. 2008).

         While it appears that Plaintiff would have a strong likelihood of success on the merits of its claims, and would be entitled to injunctive relief as discussed below, given that Plaintiff is moving for relief before the redemption period has expired, the Court may also grant the relief that Plaintiff seeks here, i.e. extension of the redemption period, as a simple matter of equity. Powers v. Bank of America, 63 F.Supp.3d 747, 752 (E.D. Mich. 2014) (denying an injunction but granting an extension of ...

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