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In re Claim for Surplus Funds

Court of Appeals of Michigan

May 21, 2019

SPECIALIZED LOAN SERVICING, LLC, Respondent-Appellee. BAERE CO, Petitioner-Appellant,

          Kent Circuit Court LC No. 18-001745-CZ

          Before: Gleicher, P.J., and Ronayne Krause and O'Brien, JJ.

          PER CURIAM.

         Petitioner, BAERE, Co., appeals as of right the order granting summary disposition in favor of respondent, Specialized Loan Servicing, LLC (SLS). We affirm.

         I. BACKGROUND

         This case arises out of the foreclosure sale of property located in Grand Rapids, Michigan (the property). The original property owner took out a mortgage on the property, and he died approximately eleven years later. The mortgage was assigned to respondent SLS, and in the meantime, petitioner BAERE purchased the property via quit claim deed from the original property owner's son. The mortgage eventually fell into default, whereupon respondent initiated a foreclosure by advertisement. As of the day of the foreclosure sale, the amount of the indebtedness on the mortgage was $51, 915.75. Respondent made an initial bid of $20, 300. The successful bidder, non-party RDG New Homes, LLC, bid $50, 000. Respondent received $20, 300 following the sale, and the Sheriff held the remaining proceeds. The parties both sought the remaining $29, 700 of "surplus" funds. After holding a hearing and considering the parties' arguments, the trial court determined that petitioner was not entitled to any funds from the foreclosure sale, because respondent's mortgage was not satisfied by the proceeds of the sale. Accordingly, the trial court granted respondent's motion for the remaining $29, 700 from the sale. Petitioner appeals, arguing that the trial court misinterpreted MCL 600.3252.


         We review a trial court's ruling on a motion for summary disposition de novo. Auto Club Group Ins Co v Burchell, 249 Mich.App. 468, 479; 642 N.W.2d 406 (2001). "A summary disposition motion under MCR 2.116(C)(10) tests the factual support for a claim and should be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgement as a matter of law." Weingartz Supply Co v Salsco Inc, 310 Mich.App. 226, 232; 871 N.W.2d 375 (2015). A genuine issue of material fact exists when the record, "giving the benefit of reasonable doubt to the opposing party, would leave open an issue upon which reasonable minds might differ." Shallal v Catholic Social Servs of Wayne Co, 455 Mich. 604, 609; 566 N.W.2d 571 (1997). We also review de novo questions of statutory interpretation, with the goal of ascertaining and applying the intent of the Legislature as expressed by the language of the statute. In re $55, 336.17 Surplus Funds, 319 Mich.App. 501, 506-507; 902 N.W.2d 422 (2017).

         III. ANALYSIS

         As noted, petitioner argues that the trial court misinterpreted MCL 600.3252 and erroneously rejected petitioner's claim that it was the only party entitled to the surplus funds. We disagree.

         MCL 600.3252 provides, in its entirety:

If after any sale of real estate, made as herein prescribed, there shall remain in the hands of the officer or other person making the sale, any surplus money after satisfying the mortgage on which the real estate was sold, and payment of the costs and expenses of the foreclosure and sale, the surplus shall be paid over by the officer or other person on demand, to the mortgagor, his legal representatives or assigns, unless at the time of the sale, or before the surplus shall be so paid over, some claimant or claimants, shall file with the person so making the sale, a claim or claims, in writing, duly verified by the oath of the claimant, his agent, or attorney, that the claimant has a subsequent mortgage or lien encumbering the real estate, or some part thereof, and stating the amount thereof unpaid, setting forth the facts and nature of the same, in which case the person so making the sale, shall forthwith upon receiving the claim, pay the surplus to, and file the written claim with the clerk of the circuit court of the county in which the sale is so made; and thereupon any person or persons interested in the surplus, may apply to the court for an order to take proofs of the facts and circumstances contained in the claim or claims so filed. Thereafter, the court shall summon the claimant or claimants, party, or parties interested in the surplus, to appear before him at a time and place to be by him named, and attend the taking of the proof, and the claimant or claimants or party interested who shall appear may examine witnesses and produce such proof as they or either of them may see fit, and the court shall thereupon make an order in the premises directing the disposition of the surplus moneys or payment thereof in accordance with the rights of the claimant or claimants or persons interested. [(emphasis added).]

         A mortgage is "[a] conveyance of an interest in real estate to secure the performance of an obligation, typically a debt. The very purpose of mortgage foreclosure is to ensure that the mortgagor's debt, secured by a mortgage to a mortgagee, is satisfied." In re $55, 336.17 Surplus Funds, 319 Mich.App. at 508 (quotation marks and citation omitted; alteration in original).

         Petitioner argues that respondent's mortgage was satisfied once it received the $20, 300 payment from the foreclosure sale. Petitioner points out, correctly, that a foreclosure sale extinguishes the mortgage. Mortgage & Contract Co v First Mortgage Bond Co, 256 Mich. 451, 452; 240 N.W. 39 (1932). Petitioner argues that respondent's bid of $20, 300 represented the amount necessary to satisfy the mortgage. Petitioner argues that, therefore, any amount exceeding this bid constituted surplus funds because the funds remained "in the hands of the officer or other person making the sale." Petitioner asserts ...

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