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STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF WAYNE
FEDERAL HOME LOAN MORTGAGE CORP,
Plaintiff/Appellee,
v Case No. 12-004097-AV Hon. Jeanne Stempien
Lower Ct. Case No.: 11 F3556Hon. Michael K. McNally
PATRICK J. MCENHILL and CAROLYN F. MCENHILL
Defendants/Appellants.________________________________________________________________________Rana Razzaque (P67627) Trott & Trott, P.C.Attorney for Plaintiff/Appellee31440 Northwestern, Ste. 200Farmington Hills, MI 48334(248) 723-6452
Keith G. Tatarelli (P41725)Attorney for Defendants/Appellants 1800 Crooks, Ste. CTroy, MI 48084(810) 338-6361 or (248) 220-7140
________________________________________________________________________
DEFENDANT/APPELLANT’S BRIEF ON APPEAL
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
Index of Authorities ...........................................................................................................iiStatement of Jurisdiction ...................................................................................................iii Statement of Questions Presented .................................................................................... iv Introduction ....................................................................................................................... 1Statement of Facts ............................................................................................................. 2Law and Analysis .............................................................................................................. 4
I. FORECLOSING PARTIES MUST STRICTLY ADHERE TO STATUTORY MANDATES……………………………………………………………………………..4
II. THE FORECLOSING PARTY WAS ABN, NOT CITI, AND ABN VIOLATED MCL 600.3204(d)(1)……………………………………………………………………..4
III. CITI DID NOT RECORD ITS INTEREST PRIOR TO THE SHERIFF’S SALE AND THUS VIOLATED MCL 600.3204(3)……………………………………………5
Relief Requested………………………………………………………………………….7Proof of Service…………………………………………………………………………...8 Index of Exhibits ................................................................................................................9
iINDEX OF AUTHORITIES
Cases:
Dohm v. Haskin, 88 Mich 144 (1891)………………………………………………..4
Kim v JP Morgan Chase Bank, [published January 12, 2012]………………….3, 6-7
Lee v. Mason, 10 Mich 403 (1862)…………………………………………………..4
Man. Han.Mtg. Co. v. Snell, 142 Mich App 548 (1985)……………………………..4
Massella v. Besson,359 Mich 512 (1960)…………………………………………….4
Reid v. Rylander, 270 Mich 263 (1935)………………………………………………4
State Statutes:MCL 600.3204(1)(d).................................................................................................3-5MCL 600.3204(3)…………………………………………………………………..5-6
State Court Rules:MCR 4.201(N) and MCR 7.101…………………………………………………….iii
iiSTATEMENT OF JURISDICTION
This is an appeal as of right of a judgment of possession entered by 33rd District Court
Judge Michael K. McNally in favor of Plaintiff-Appellee Federal Home Loan Mortgage
Corporation against Defendant-Appellants Patrick and Carolyn McEnhill after Plaintiff
foreclosed on their home and after the redemption period had expired.
The trial court’s Order was entered on January 12, 2012 after the court granted
Plaintiff’s Motion for Summary Disposition and denied Defendants’ Motion for
Summary Disposition. A Motion for Reconsideration was filed by Defendants on
February 14, 2012. After a hearing on March 13, 2012 the Motion for Reconsideration
was denied by the Trial Court. [Exhibit 1, Order].
This honorable Court has jurisdiction over Defendants-Appellants’ Claim of Appeal
pursuant to MCR 4.201(N) and MCR 7.101.
iiiSTATEMENT OF QUESTIONS PRESENTED
1. DID THE FORECLOSURE OF DEFENDANTS-APPELLANTS HOME COMPLY WITH MCL 600.3204(1)(d)?
Defendants-Appellants say YES
The trial court said NO
2. DID THE FORECLOSURE OF DEFENDANTS-APPELLANTS HOME COMPLY WITH MCL 600.3204(3)?
Defendants-Appellants say NO
The trial court said YES
iv.INTRODUCTION
This case demonstrates the disregard by foreclosing entities of the strict mandates
imposed on mortgage lenders and/or servicers in their (often understandable) pursuit to
foreclose on distressed homeowners. Insofar as the Michigan legislature has chosen to
allow (properly) foreclosing entities the luxury and convenience of a non-judicial
foreclosure process, it is just and fair to demand such entities at minimum strictly
adhere to the statutes governing foreclosure.
Defendants-Appellants ask this Honorable Court to grant their appeal by exercising its
power to set aside the foreclosure/Sheriff’s Deed on Mortgage Sale due to Plaintiff-
Appellants failure to adhere to what are essentially simple statutory mandates attendant to
non-judicial foreclosure. And, should this Honorable Court sanction Defendants-
Appellants appeal, no “windfall” will be bestowed. Plaintiff-Appellant can and most
likely will again pursue foreclosure. However, given Defendants-Appellants improved
financial condition (since the previous foreclosure), perhaps a loan modification or
simple reinstatement of the loan can spare the county from yet another vacant home.
1STATEMENT OF FACTS
On or about March 3, 2003 Defendants Mr. and Mrs. McEnhill entered into a
mortgage and accompanying Promissory note with loan “Originator” (and foreclosing
party by way of advertisement) ABN AMRO Mortgage Group, Inc.. (ABN). ABN was
identified as the Mortgagee. Defendants defaulted on the loan. ABN was identified as the
foreclosing party in all published foreclosure by Advertisement(s), the first commencing
on 12/17/2010. [Exhibit 2]
ABN was acquired by CitiMortgage, Inc. (CITI). in March 2007. The Certificate of
Merger [Exhibit 3] announced and asserted that ABN would no longer act as a separate
corporation and from that time forward be known as CitiMortgage, Inc.. The MI
Department of Labor & Economic Growth certified ABN’s “Certificate of Withdrawal”
on May 17, 2007. In its September 11, 2007 “Application for Certificate of Withdrawal”
filed with the Michigan Department of Labor & Economic Growth Bureau of
Commercial Services, ABN asserted “The corporation is not transacting business or
conducting affairs in the State of Michigan / The corporation hereby surrenders its
authority to transact business or conduct affairs in Michigan.” [Exhibit 4]
CITI never was identified as the foreclosing party in any of the advertisements of
foreclosure, despite the pronouncements of the Certificate of Merger. And, CITI did not
record its interest prior to the Sheriff’s Deed on Mortgage sale.
The Sheriff’s Deed on Mortgage Sale which purportedly conveyed title to Plaintiff-
Appellant Federal Home Loan Mortgage Corporation (Freddie Mac) occurred on January
19, 2011. The redemption period passed and Freddie Mac commenced eviction
proceedings in the 33rd District Court on 9/23/2011.2
After initial appearance, Defendants-Appellants filed their Motion for Summary
Disposition on October 1, 2011. Plaintiff-Appellant filed an Answer and Counter-Motion
for Summary Disposition on October 6, 2012. The Hearing on Motion(s) was stayed
pending a Chapter 7 bankruptcy petition (which ultimately led to successful discharge).
Defendants-Appellants then filed an Addendum to their initial Motion for Summary
Disposition on January 2, 2012. [The addendum reiterated and expanded on Appellants
argument that the foreclosure violated MCL 600.3204(1)(d)].
On January 12, 2012 after entertaining oral argument the trial court granted
Plaintiff’s Motion for Summary Disposition and denied Defendants’ Motion for
Summary Disposition. The Court’s decision was based on its (flawed and counter-
factual) finding that CITI was the foreclosing party and thus no violation of MCL
600.3204(1)(d) had transpired. [Exhibit 5, Transc. p. 5] A Motion for Reconsideration
was filed by Defendants-Appellants, arguing that the foreclosure violated MCL
600.3204(3) (premised on the Kim v JP Morgan Chase Bank, [published January 12,
2012] and the Court of Appeals’ interpretation of the mandates of the statute. After a
hearing on March 13, 2012 the Motion for Reconsideration was denied by the Trial
Court. The Court opined that Kim, supra. is inapplicable and thus CITI did not have to
record its interest prior to the Sheriff’s sale. [Exhibit 5, Transc. pp. 13-15]
3LEGAL ANALYSIS
I. FORECLOSING PARTIES MUST STRICTLY ADHERE TO STATUTORY MANDATES
In Reid v. Rylander, 270 Mich 263 (1935), the Michigan Supreme Court clearly ruled
that a mortgagor may hold over after sale, and, after expiration of the redemption period,
challenge the validity of the sale as a defense to the claim for possession; particularly
when the invalidity is alleged to have occurred in the sale procedure. See, also Man. Han.
Mtg. Co. v. Snell, 142 Mich App 548 (1985) at 553-554.
The Reid Court clearly established the standard/burden of proof in such proceedings
where the Plaintiff seeks possession following an allegedly defective foreclosure sale by
advertisement:
“The burden was on Appellee to establish his right to possession, and this required evidence of compliance with every statutory provision relative to foreclosure by advertisement.” Id at 267
This is consistent with the requirement that a mortgagee seeking to foreclose a
mortgage containing a power of sale by advertisement [an ex parte statutory proceeding]
must proceed strictly in accordance with the statutory requirements. Massella v. Besson,
359 Mich 512 (1960); Dohm v. Haskin, 88 Mich 144 (1891); Lee v. Mason, 10 Mich 403
(1862).
II. THE FORECLOSING PARTY WAS ABN, NOT CITI, AND ABN VIOLATED MCL 600.3204(d)(1) MCL 600.3204 states in pertinent part:
(1) Subject to subsection (4), a party may foreclose a mortgage by advertisement if all of the following circumstances exist: (emphasis added)
(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;
As stated previously, the District Court’s initial Order granting Plaintiff-Appellants
Motion for Summary Disposition (and denying Defendants-Appellants Motion for same) 4
was premised in large measure on the Court’s belief that CITI was the foreclosing party.
[Exhibit 5, Transc. p. 5] This decision flies in the face of the obvious… and begs the
obvious question. How do you determine which entity was the foreclosing party?
Appellants asserted then and assert now the only metric available is what entity is
identified in the “advertisements of foreclosure.” A review of same [Exhibit 2] reveals
CITI to be conspicuously absent.
MCL 600.3204(1)(d) is very specific. Since ABN was the foreclosing party it must
have been either the owner of the indebtedness or of an interest in the indebtedness
secured by the mortgage or the servicing agent of the mortgage. At the time ABN
commenced foreclosure (12/17/10) by advertisement, it did not exist. [Exhibits 3-4]
Thus, the District court’s initial decision to grant Judgment in favor of Plaintiff-
Appellee hinged on a gross factual error. Clearly, at the time it commenced foreclosure
ABN did not “own the indebtedness, have an interest in the indebtedness secured by the
mortgage” and of course was not the “servicing agent of the mortgage.” Accordingly, the
advertisements (of foreclosure) did not comport with the dictates of MCL
600.3204(1)(d).
III. CITI DID NOT RECORD ITS INTEREST PRIOR TO THE SHERIFF’S SALE AND THUS VIOLATED MCL 600.3204(3)
MCL 600.3404(3) states in pertinent part:
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.
Appellants argument in their Motion for Reconsideration was a natural outcome of (1)
the District Court’s initial (flawed) finding that CITI was the foreclosing party; and (2)
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the decision rendered in Kim v JP Morgan Chase Bank, [published January 12, 2012].
[Exhibit 6]
In its response to Appellants Motion for Reconsideration the Appellee insisted that
CITI did not have to record its interest because it acquired the loan via merger (i.e. “by
operation of law”). [Exhibit 5, Trans. Pp. 10-13] The District Court agreed with
Appellee’s position.
In Kim, supra., JP Morgan Chase Bank maintained it did not have to record its interest
in the mortgage/loan prior to the Sheriff’s sale because it acquired its interest by
“operation of law,” specifically via purchasing (through the FDIC) assets previously held
by the (then seized and bankrupt) Washington Mutual Bank.
Per the Court in Kim, supra., the unambiguous language of MCL 600.3204(3)
mandating that an assignment be recorded prior to Sheriff’s sale, did not provide a
loan “acquiring party” an exemption from the plain language of the statute (i.e. an
exemption if the mortgage/loan was obtained by “operation of law”). In unequivocal
terms the Court stated as follows:
“Defendant argues that the recording provision of MCL 600.3204(3) is inapplicablebecause it acquired its interest in the mortgage by operation of law. The trial court granted summary disposition in defendant’s favor on this basis. MCL 600.3204(3), however, makes no exception for mortgage interests acquired “by operation of law.” “A court must not judicially legislate by adding into a statute provisions that the Legislature did not include.” In re Wayne Co Prosecutor, 232 Mich App 482, 486; 591 NW2d 359 (1998).” (emphasis added)
If, as the District Court held, that CITI was the foreclosing party (via its pre-
foreclosure acquisition of ABN), it cannot be maintained it recorded its interest prior to
the Sheriff’s sale. Accordingly it violated MCL 600.3204(3) rendering the
the foreclosure void ab initio.
The Michigan Court of Appeals’ decision in Kim, supra. is instructive in many ways,
especially the Court’s refusal to “add language” to the statute. It’s worthwhile to consider
6how/in what manner one entity acquires the ability to foreclose in Michigan. The answer
is that there exists only 3 pertinent means: (1) by way of assignment; (2) by acquisition
(as in the facts submitted in Kim, supra. via from the FDIC); or (3) by operation of law
(via merger). To suggest that acquiring a loan via merger is not an acquisition which is
“by operation of law” is ludicrous. Such an acquisition cannot be characterized in any
other fashion, and most certainly is not an acquisition by way of assignment or purchase.
The bottom line is this: whether an entity acquires a loan/mortgage by way of
Assignment, purchase or by way of “operation of law,” it must record its interest prior to
a Sheriff’s sale for said sale to be lawful. Insofar as CITI did not record its interest prior
to the Sheriff’s sale, [Exhibit 7] it was not statutorily authorized to proceed with the sale.
RELIEF REQUESTED
Accordingly Defendants-Appellants Patrick and Carolyn McEnhill respectfully ask
this honorable Court to overturn the trial court’s granting of Plaintiff’s Motion for Entry
of Judgment as a matter of law and set aside the Sheriff’s sale.
Respectfully Submitted,
.
Keith G. Tatarelli (P41725) Attorney for Appellants 1800 Crooks, Ste. C Troy, MI 48084 (248) 220-7140 / (810) 338-6361 [email protected]
7STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF WAYNE
FEDERAL HOME LOAN MORTGAGE CORP,
Plaintiff/Appellee,
v Case No. 12-004097-AV Hon. Jeanne Stempien
Lower Ct. Case No.: 11 F3556Hon. Michael K. McNally
PATRICK J. MCENHILL and CAROLYN F. MCENHILL
Defendants/Appellants.________________________________________________________________________Rana Razzaque (P67627) Trott & Trott, P.C.Attorney for Plaintiff/Appellee31440 Northwestern, Ste. 200Farmington Hills, MI 48334(248) 723-6452
Keith G. Tatarelli (P41725)Attorney for Defendants/Appellants 1800 Crooks, Ste. CTroy, MI 48084(810) 338-6361 or (248) 220-7140
________________________________________________________________________
Proof of Service
I Hereby Certify that on Thursday, May 17, 2012 I served Plaintiff/Appellee’s Counsel (via FIRST CLASS mail) one copy of Defendants/Appellants’ Appellate Brief and Index of Exhibits.
Respectfully Submitted,
.
Keith G. Tatarelli (P41725) Attorney for Appellants 1800 Crooks, Ste. C Troy, MI 48084 (248) 220-7140 / (810) 338-6361 [email protected]
8INDEX OF EXHIBITS
Exhibit 1 – Order
Exhibit 2 – Published Foreclosure by Advertisement(s)Exhibit 3 – Certificate of Merger (ABN AMRO Mortgage, Inc. into CitiMortgage, Inc.) Exhibit 4 – ABN’s Certificate of Withdrawal and Application for Certificate of Withdrawal (filed with MI Dept. of Labor & Economic Growth)Exhibit 5 – Transcript (Motion for Reconsideration Hearing, March 13, 2012)Exhibit 6 – Kim v JPMorgan Chase BankExhibit 7 – Wayne Co. property record (pre and post Sheriff’s sale)
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