Veasley v. The Federal National Mortgage Association et al
Filing
26
OPINION and ORDER granting Defendant's 15 Motion for Summary Judgment. Signed by District Judge Gerald E. Rosen. (JOwe)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
THEOLA VEASLEY,
Plaintiff,
No. 2:12-cv-13642
Hon. Gerald E. Rosen
vs.
THE FEDERAL NATIONAL MORTGAGE
ASSOCIATION and BAC HOME LOANS
SERVICING, LP FKA COUNTRYWIDE
HOME LOANS SERVICING, LP,
Defendants.
___________________________________/
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT
I. INTRODUCTION
Plaintiff Theola Veasley commenced this suit in Oakland County Circuit
Court in July of 2012, asserting a claim against Defendants Federal National
Mortgage Association (“Fannie Mae”) and BAC Home Loans Servicing, LP
(“BAC”) arising from the foreclosure sale of her home in Southfield, Michigan.
Plaintiff claims that Defendants initiated the foreclosure sale without proper chain
of title due to a clerical error in the transfer of the mortgage from a prior mortgage
holder to BAC, in violation of M.C.L. § 600.3244. Defendants removed the case
to this Court on August 16, 2012, and the parties have now filed cross-motions for
1
summary judgment. Defendants argue that (1) Plaintiffs’ claims are barred by res
judicata because a Michigan state court already ruled that the foreclosure was valid
and issued a Judgment of Possession to Defendant Fannie Mae, the purchaser of
the home at the sheriff’s sale; and (2) the clerical error in the mortgage transfer did
not invalidate the mortgage. Plaintiff opposes these two points in her own motion
for summary judgment. The Court also issued an order directing the parties to file
supplemental briefing as to whether the Court has jurisdiction under the Rooker–
Feldman doctrine, and the parties have done so, both arguing that this Court has
jurisdiction.
Having reviewed and considered the parties’ briefs and supporting
documents and the entire record of this matter, the Court has determined that the
pertinent allegations and legal arguments are sufficiently addressed in these
materials and that oral argument would not assist in the resolution of this motion.
Accordingly, the Court will decide the parties’ motions “on the briefs.” See L.R.
7.1(f)(2). This Opinion and Order sets forth the Court’s ruling.
II. PERTINENT FACTS
The facts are mostly undisputed and relatively straightforward. On August
31, 2004, Plaintiff Theola Veasley attempted to close on the purchase of a home at
24669 Lafayette Circle, Southfield, Michigan (“24669 Lafayette”) from non-party
2
Royse Development. Pl.’s Compl. ¶ 8, Dkt. # 1. At the closing, however, Royse
conveyed to Plaintiff a warranty deed to a different property: 24654 Lafayette
Circle, Southfield Michigan (“24654 Lafayette”). Def.’s Mot. for Summ. J., Ex. A,
Dkt. # 15-2. The warranty deed contained a metes-and-bounds description of
24654 Lafayette, and described those metes-and-bounds as “[m]ore commonly
known as: 24654 Lafayette Circle.” Id. Plaintiff financed her intended purchase of
24669 Lafayette through a $249,000 loan from Countrywide Home Loans, secured
by a mortgage executed by Plaintiff and granted to non-party Mortgage Electronic
Registration Systems, Inc. (the “Mortgage”). Id. at Ex. B-C, Dkt # 15-3, 15-4.
The Mortgage granted a security interest in 24654 Lafayette, the property for
which Plaintiff had incorrectly been given a deed.
The mistake in the deed was quickly discovered.
In December 2004,
Plaintiff conveyed 24654 Lafayette to its intended owner, Anthony Rhine, and
Rhine conveyed 24669 Lafayette to Plaintiff. Id. at Ex. D-E, Dkt. # 15-5, 15-6.
Both deeds contained the correct metes-and-bounds descriptions of the properties
as well as the correct descriptive addresses. Id. On October 21, 2005, Plaintiff and
Mortgage Electronic Registration Systems executed a modification “to correct the
legal description” of the Mortgage and bring it into line with the corrected deed.
Id. at Ex. F, Dkt. # 15-7. The modification contained the correct metes-andbounds description of 24669 Lafayette and the correct descriptive address. Id. On
3
the same day, Mortgage Electronic Registration Systems granted Plaintiff a partial
release of the Mortgage only as to the 24654 Lafayette property. Id. at Ex. G, Dkt.
# 15-8.
Nearly five years later, on August 30, 2010, Mortgage Electronic
Registration Systems assigned the Mortgage to Defendant BAC. Id. at Ex. H, Dkt.
# 15-9. The assignment specifically stated that it transferred interest in “a certain
real estate mortgage dated August 31, 2004, made by Theola Veasley . . . to
Mortgage Electronic Registration Systems, Inc.” and referenced the Mortgage’s
original county liber number. Id. The assignment provided the correct address of
Plaintiff’s property, 24669 Lafayette, but, like the original mortgage, incorrectly
contained the metes-and-bounds description of the 24654 Lafayette property. Id.
The error apparently went unnoticed until the foreclosure proceedings
leading to this case. At some point in 2010, Plaintiff defaulted on the Mortgage.
Pl.’s Compl. ¶ 15, Dkt. # 1. BAC subsequently initiated foreclosure proceedings
and published notices of foreclosure. Def.’s Mot. for Summ. J., Ex. I, Dkt. # 1510. On February 22, 2011, a sheriff’s sale was held for the 24669 Lafayette
property, and Defendant Fannie Mae purchased the property for $68,000. Id. All
foreclosure notices and the sheriff’s deed produced at the sale provided the correct
metes-and-bounds description and correct address of 24669 Lafayette. Id.
4
In accordance with Michigan law, the sale was only to become operative at
the expiration of a redemption period, allowing Plaintiff the opportunity to reclaim
the home by paying the amount bid at the sheriff’s sale, plus interest and fees. See
M.C.L. § 600.3244. The redemption period was set to expire on August 22, 2011.
Def.’s Mot. for Summ. J., Ex. I, Dkt. # 15-10. On July 29, 2011, Plaintiff retained
the services of non-party Dynamic Housing Solutions (“DHS”) to facilitate the
redemption. 1 Pl.’s Mot. for Summ. J., Dkt. # 17, at 5. On August 17, Plaintiff
received a written calculation of the redemption amount, and on the same day,
Dynamic Housing Solutions mailed a letter “requesting a 4 day written redemption
extension to allow time” for the funds, which were “sitting in a retirement account”
to be transferred. Id. at Ex. I-J.2 This extension was never approved, and Plaintiff
1
As support for this, Plaintiff provides only an “authorization letter” stating that
she “[gave her] complete consent and authorization to . . . Dynamic Housing
Solutions, to give and receive any and all documentation and communication
regarding [her] home at 24669 Lafayette.” Pl.’s Mot. for Summ. J., Ex. H, Dkt. #
17-2.
2
Why this extension was necessary is not entirely clear. Plaintiff apparently
requested calculation of the redemption amount on August 3, 2011, and email
correspondence occurred between Dynamic Housing Solutions and Bank of
America during early August in attempt to produce the calculation, though it is not
clear why it was not sent until August 17. Pl.’s Mot. for Summ. J., Exs. J-K, Dkt.
# 17-2. In her brief in support of her motion for summary judgment, Plaintiff
claims that because there were only five days between the date on which she
received the calculation of the redemption (August 17, 2011) amount and the
expiration of the redemption period (August 22, 2011), there was not sufficient
“lead time” for the funds to be “withdrawn from [her] money market/retirement
5
did not make any payment by the expiration of the redemption period on August
22, resulting in Fannie Mae taking title to 24669 Lafayette.
On April 9, 2012, Fannie Mae brought an action in Michigan’s 46th District
Court, seeking to recover possession of 24669 Lafayette (Case No. LT12-1800).3
The court held a hearing on April 24, 2012, and on June 14, 2012, in a summary
proceeding, it issued a Judgment of Possession to Fannie Mae. Id. at Ex. L. There
is no record of the issues discussed at the hearing -- the Judgment was issued
without any accompanying opinion.
An order for eviction was subsequently
entered on July 25, 2012.
Plaintiff did not appeal that Judgment, instead filing the instant action on
July 13, 2012, in Oakland County Circuit Court, asserting a single claim: that
Defendants did not comply with M.C.L. § 600.3204, which requires that “a record
chain of title must exist before the date of sale” by the party foreclosing the
mortgage. Pl.’s Compl., Dkt. # 1, at ¶ 26. Plaintiff requested that the court (1) set
aside the foreclosure sale and resulting sheriff’s deed and (2) enjoin eviction
account.” Pl.’s Mot. for Summ. J., Dkt. # 17, at 5.
3
In their joint statement regarding past and present litigation, the parties also note
that Fannie Mae had previously brought a separate case against Plaintiff in
Michigan’s 46th District Court (Case No. LT11-4314) that was dismissed without
prejudice, though the record does not indicate why the case was dismissed. Joint
Statement Regarding Past and Present Litigation, Dkt. # 24, at 2.
6
proceedings. Pl.’s Compl., Dkt. # 1. Id. Defendants subsequently removed the
action to this Court on August 16, 2012, Def.’s Removal, Dkt. # 1, and, on August
30, 2012, the parties entered a joint stipulation staying the state eviction action
(Case No. LT12-1800) pending resolution of this case. Dkt. # 4. The parties have
now filed cross-motions for summary judgment. Dkt. # 15, 17. On March 28,
2014, this Court issued an order directing the parties to file supplemental briefing
as to whether Plaintiff’s Complaint must be remanded to the Oakland County
Circuit Court pursuant to the Rooker–Feldman doctrine.4 Dkt. # 22. The parties
have now submitted such briefing, and the issues are ripe for review.
III. DISCUSSION
A.
Rule 56 Standard
Through their present motions, both parties seek summary judgment in their
favor pursuant to Rule 56 of the Federal Rules of Civil Procedure. Under that
Rule, Summary judgment is proper if the moving party “shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
4 As put in that order, “[u]nder Rooker–Feldman, a federal district court lacks
jurisdiction to review state court proceedings, as such review is limited to the
Supreme Court of the United States. See, e.g., Exxon Mobile Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280 (2005); McCormick v. Braverman, 451 F.3d 382 (6th
Cir. 2006); Battah v. ResMAE Mortg. Corp., 746 F. Supp. 2d 869 (E.D. Mich.
2010) (Rosen, C.J.).” Order Requiring Supplemental Briefing, Dkt. # 22, at 2.
7
matter of law.” Fed. R. Civ. P. 56(a). As the Supreme Court has explained, “the
plain language of Rule 56[] mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986). In addition, where a moving party seeks an
award of summary judgment in its favor on a claim or issue as to which it bears the
burden of proof at trial, this party’s “showing must be sufficient for the court to
hold that no reasonable trier of fact could find other than for the moving party.”
Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986) (emphasis and
citation omitted).
In deciding a motion brought under Rule 56, the Court must view the
evidence in a light most favorable to the nonmoving party. Pack v. Damon Corp.,
434 F.3d 810, 813 (6th Cir. 2006). Yet, the nonmoving party may not rely on mere
allegations or denials, but must “cit[e] to particular parts of materials in the record”
as establishing that one or more material facts are “genuinely disputed.” Fed. R.
Civ. P. 56(c)(1). But, “the mere existence of a scintilla of evidence that supports
the nonmoving party’s claims is insufficient to defeat summary judgment.” Pack,
434 F.3d at 814 (alteration, internal quotation marks, and citation omitted).
8
B.
Because the State-Court Eviction Suit Remains Pending, the Rooker–
Feldman Doctrine Does Not Apply Here
Though neither party has moved to remand this case to state court for lack of
federal jurisdiction, under Federal Rule of Civil Procedure 12(b)(1), this Court may
dismiss or remand sua sponte a complaint for lack of subject matter jurisdiction.
The Rooker–Feldman doctrine is a judicially imposed limitation on subject matter
jurisdiction that divests a federal court of jurisdiction over cases that invite review
of state-court proceedings, even where a federal question is raised or complete
diversity of the parties is present. See Exxon Mobil Corp. v. Saudi Basic Indus.
Corp., 544 U.S. 280, 291 (2005) (“Rooker and Feldman exhibit the limited
circumstances in which [the Supreme Court’s] appellate jurisdiction over statecourt judgments, 28 U.S.C. § 1257, precludes a United States district court from
exercising subject-matter jurisdiction in an action it would otherwise be
empowered to adjudicate under a congressional grant of authority, e.g., § 1330
(suits against foreign states), § 1331 (federal question), and § 1332 (diversity).”).
The doctrine arises from a pair of Supreme Court decisions. In Rooker v.
Fidelity Trust Co., the plaintiff filed a federal action seeking to have a prior statecourt decision “declared null and void.” Rooker v. Fid. Trust Co., 263 U.S. 413,
414 (1923). The Court, noting that “no court of the United States other than [the
Supreme Court] could entertain a proceeding to reverse or modify” the state
9
decision and that “[t]he jurisdiction possessed by the District Courts is strictly
original,” the Court affirmed dismissal of the action. Id. at 416; see also 28 U.S.C.
§ 1257 (“Final judgments or decrees rendered by the highest court of a State in
which a decision could be had, may be reviewed by the Supreme Court by writ of
certiorari where the validity of a treaty or statute of the United States is drawn in
question or where the validity of a statute of any State is drawn in question on the
ground of its being repugnant to the Constitution . . . or where any title, right,
privilege, or immunity is specially set up or claimed under the Constitution . . . .”).
And in District of Columbia Court of Appeals v. Feldman, the Court elaborated on
the circumstances under which jurisdiction is divested by the Rooker principle. In
that case, the plaintiffs had unsuccessfully sought permission, in the District of
Columbia Court of Appeals, to sit for the District of Columbia bar examination
despite not having graduated from an “approved law school” as required by
District of Columbia statute. D.C. Court of Appeals v. Feldman, 460 U.S. 462,
464-65 (1983). The plaintiffs then brought a federal lawsuit against the District of
Columbia Court of Appeals, asserting that the state ruling violated their Fifth
Amendment rights and asking, in part, that the federal court grant a waiver for
them to sit for the bar. The Supreme Court held that the district court lacked
jurisdiction over the waiver petitions, as they were “inextricably intertwined with
10
the District of Columbia Court of Appeals’ decisions, in judicial proceedings, to
deny [plaintiffs’] petitions.” Id. at 486-87.
The Supreme Court revisited the Rooker–Feldman doctrine more recently in
Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005). The
Court’s holding in that case dealt with parallel state and federal litigation -- which
does not trigger Rooker–Feldman -- but in influential dicta, it clarified that the
Rooker–Feldman doctrine “is confined to cases of the kind from which the
doctrine acquired its name: cases brought by state-court losers complaining of
injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those
judgments.”
Id. at 1521-22.
Thus, “[i]f a federal plaintiff ‘present[s] some
independent claim, albeit one that denies a legal conclusion that a state court has
reached in a case to which he was a party . . . , then there is jurisdiction and state
law determines whether the defendant prevails under principles of preclusion.’”
Id. at 293 (second alteration and omission in original) (emphasis added) (quoting
GASH Assocs. v. Rosemont, 995 F.2d 726, 729 (9th Cir. 1993)).
Following Exxon Mobil, the Sixth Circuit has elaborated on this this
“independent claim” language:
The question naturally arises as how to differentiate between a claim
that attacks a state court judgment, which is within the scope of the
Rooker–Feldman doctrine, and an independent claim, over which a
11
district court may assert jurisdiction. . . . The inquiry . . . is the source
of the injury the plaintiff alleges in the federal complaint. If the
source of the injury is the state court decision, then the Rooker–
Feldman doctrine would prevent the district court from asserting
jurisdiction. If there is some other source of injury, such as a third
party's actions, then the plaintiff asserts an independent claim.
McCormick v. Braverman, 451 F.3d 382, 393 (6th Cir. 2006).
Against this backdrop, the Court addresses jurisdiction in this case. Both
Plaintiff and Defendant submitted briefs supporting jurisdiction in this Court.
Though the parties make several separate arguments that the Court will discuss
below, the primary thrust of both briefs is that Plaintiffs’ injury resulted from the
incorrect property description in the assignment of the Mortgage, which, under
M.C.L. § 600.3204, would prevent Defendants from foreclosing on the property.
Therefore, the parties assert, “the alleged injury is from the alleged wrongdoing of
third parties . . . not from legal error by the eviction court or from the Judgment of
Possession itself.” Def.’s Supplemental Br., at 8. They claim that this lawsuit
“concern[s] Defendant’s actions which predate the foreclosure process and any
prior actions between the parties.” Pl.’s Supplemental Br., at 7. The Court is not
convinced.
First, the Court does not agree that the incorrect assignment of the Mortgage
actually injured Plaintiff.
M.C.L. § 600.3204 provides that “[i]f the party
foreclosing a mortgage by advertisement is not the original mortgagee, a record
12
chain of title must exist before the date of sale.” The provision simply provides a
requirement for non-original mortgagees in order to initiate foreclosure
proceedings.
If the assignment of the Mortgage from Mortgage Electronic
Registration Systems to BAC was indeed faulty, that faulty assignment did not
harm Plaintiff in any way; indeed, it would benefit her by potentially eliminating
her debt obligation. Plaintiff was, however, injured when possession of her house
was turned over to BAC.
But the source of that injury was the state-court
judgment, not the Defendants’ actions in receiving the assignment of the Mortgage.
Plaintiff’s claim that the foreclosure was invalid because the Mortgage was not
properly assigned is, essentially, a direct challenge to the state-court ruling; she is
asserting a defense to that action.
This reasoning is in line with opinions both in this Court and the Sixth
Circuit finding that federal suits brought by state-court losers of foreclosure and
possession actions seeking to challenge those orders are barred by Rooker–
Feldman. In Battah v. ResMAE Mortgage Corp., for example, the plaintiff had
defaulted on a mortgage, leading to a sheriff’s sale at which a bank purchased the
property. 746 F. Supp. 2d 869, 872 (E.D. Mich. 2010). When the plaintiff failed
to redeem, the bank sold the property to a third party. Id. The plaintiff brought
suit in state court, seeking a restraining order preventing eviction, which was
dismissed, and the third-party owners subsequently brought a possession and
13
eviction action in state court and won a default judgment. Id. The plaintiff then
filed suit in state court, asserting, among other claims, violation of Michigan’s
foreclosure statute and that the third-party owners were not proper holders of the
mortgage note, and sought to “undo the sheriff’s sale of the property . . . and
prevent the eviction proceedings.” Id. at 871, 873. After the defendants removed
the case, this Court remanded on Rooker–Feldman grounds, stating that “Plaintiff
lost a state court foreclosure and possession action, and the state court entered an
order of eviction against him. Any of Plaintiff’s current claims which seek to
disturb the state court judgments of foreclosure, possession, or eviction, are subject
to the Rooker–Feldman doctrine.” Id. at 873. Importantly, however, the Court did
not remand the plaintiff’s independent claims of injury resulting from the
defendants’ actions, involving fraud, conspiracy, and promissory estoppel relating
to the original loan application. See id. at 874-75. Instead, only claims relating to
injuries arising from the state-court decision were remanded pursuant to Rooker–
Feldman.
As the Sixth Circuit has instructed, further evidence that a plaintiff seeks to
remedy injuries resulting from the state-court decision, not the defendant’s direct
conduct, can come from the language describing the relief that the plaintiff seeks:
Revealingly, the primary relief that [the plaintiff] requests in his
complaint is a temporary injunction that would “enjoin Defendants
from physically entering onto plaintiff[’]s property” and that would
14
“dispos[e] . . . of any other civil or procedural action regarding the
subject property.” Because the point of this suit is to obtain a federal
reversal of a state court decision, dismissal on the grounds of Rooker–
Feldman was appropriate.
Givens v. Homecomings Fin., 278 F. App’x 607, 609 (6th Cir. 2008) (second and
third alterations and omission in original). Plaintiff’s complaint in this case is
remarkably similar. She requests
the Court to find that the foreclosure by advertisement proceedings
more fully described herein are void ab initio and requests that the
Court set aside the February 22, 2011 foreclosure sale and resulting
Sheriff’s Deed granted to [Fannie Mae]. Without such relief, Plaintiff
and the occupants of 24669 Lafayette Circle face imminent eviction
and thus irrepreprable (sic) harm. Accordingly, Plaintiff further
requests that the Court enjoin the 46th District Court (Southfield)
from taking action on any Application for Order of Eviction which
[Fannie Mae] may seek to obtain possession of the home.
Pl.’s Compl. ¶ 26., Dkt. # 1. Like in Givens and Battah, Plaintiff’s injury here
arises from the state-court judgment and her claim seeks to disturb that judgment.
Numerous other cases have similarly found that Rooker–Feldman applies
when a plaintiff seeks to overturn a state-court foreclosure order in federal court.
See, e.g., Kafele v. Lerner, Sampson & Rothfuss, L.P.A., 161 F. App’x 487, 490
(6th Cir. 2005) (“That the plaintiffs’ claims are indeed ‘inextricably intertwined’ is
evident from the fact that there is simply no way for this or any other court to grant
relief without disturbing the judgments of foreclosure entered by the state court.
Each of the myriad and vague claims set forth by the plaintiffs rests on the premise
15
that the state court entry of foreclosure was invalid.”); Selakowski v. Fed. Home
Loan Mortg. Corp., No. 13-12335, 2014 WL 1207874, at *4-5 (E.D. Mich. Mar.
24, 2014) (finding a federal action asserting a claim under the Real Estate
Settlement Procedures Act and seeking to set aside a sheriff’s sale “is precisely
[the] review and ‘reversal’ of a state court judgment by a federal district court that
the Rooker–Feldman doctrine forbids,” but finding federal jurisdiction appropriate
because the state-court decision was not final); Mallory v. Cnty. of Wayne, No. 0914358, 2010 WL 2632196 (E.D. Mich. June 29, 2010) (“[Plaintiff] lost a statecourt foreclosure action that awarded a Judgment of Possession to [Defendant]. . . .
Plaintiff is the type of state-court loser complaining of injuries from a state court
judgment that triggers the Rooker–Feldman jurisdictional bar even after Exxon
Mobil.”); Sanford v. Standard Fed. Bank, No. 09-10506, 2009 WL 4885241, at *2,
4 (E.D. Mich. Dec.15, 2009) (applying Rooker–Feldman following a state-court
judgment of possession where plaintiff alleged in federal court that “the
foreclosure action of the property as well as the sheriff's deed are invalid” and
sought an order vacating the deed).
The parties make several attempts to distinguish this case from Battah and
the cases like it. They both assert that because “[Plaintiffs’] claim regarding the
allegedly faulty assignment was not even raised in, or addressed by the eviction
court,” it must be an independent claim. Def.’s Supplemental Br., at 8; see also
16
Pl.’s Supplemental Br., at 6. Plaintiff actually contradicts herself in this regard,
stating in her brief in support of summary judgment that during the state-court
eviction proceedings, she “pointed to the defective legal description in the
Assignment as grounds to demonstrate that [Fannie Mae] did not have the right to
possession and therefore no right to the entry of a Judgment of Possession.” Pl.’s
Mot. for Summ. J., Dkt # 17, at 6. But even assuming that Plaintiff’s “faulty
assignment” argument was never heard by the state court, the inquiry does not turn
on whether the plaintiff presents some new argument to the federal court that was
not dealt with by the state court. Instead, the inquiry centers on “the source of the
injury the plaintiff alleges in the federal complaint,” Braverman, 451 F.3d at 393,
and, as discussed above, the source of the injury in this case was the state-court
decision, not the allegedly faulty assignment of the Mortgage.
Second, the parties argue in their briefs that Defendants allegedly “prevented
Plaintiff from redeeming the property” by providing Plaintiff with the written
calculation of the redemption amount only days before the redemption period was
set to expire, and subsequently refusing to grant Plaintiff’s request for an
extension. Def.’s Supplemental Br., at 8; see also Pl.’s Supplemental Br., at 6.
But Plaintiff’s complaint does not assert this claim -- the only count listed in her
complaint is violation of M.C.L. § 600.3204. Pl.’s Compl. ¶¶ 22-26, Dkt. #1. She
cites to no law that Defendants violated during Plaintiff’s unsuccessful attempt to
17
redeem the property. See id. Therefore, even if Plaintiff has an independent claim
arising from the allegedly faulty redemption process, she has not presented it to
this Court.5
However, a separate issue, which the parties do not raise in their briefs,
prevents Rooker–Feldman from applying in this case.
The Rooker–Feldman
doctrine only precludes lower federal courts “from exercising appellate jurisdiction
over final state-court judgments.” Lance v. Dennis, 546 U.S. 459, 463 (2006)
(emphasis added); see also Marks v. Tennessee, 554 F.3d 619, 622 (6th Cir. 2009).
Here, there is no final state-court judgment. Though the state court has entered a
judgment of possession and an order for eviction, the parties later stipulated to the
entry of an order staying the state-court eviction proceedings while this case
remains pending. As this Court has previously held, because of such a stipulation,
the state court’s order of eviction is not final, and therefore the state court
proceedings are ongoing. See Selakowski, 2014 WL 1207874, at * 5 (finding that
because the parties had stipulated to stay the state eviction proceeding, “[i]t follows
5
Plaintiff also places emphasis on the fact that in Battah, the court noted that the
plaintiff had brought a “multitude of frivolous claims” and “waste[d] judicial
resources” by bringing suits through numerous courts. Battah, 746 F. Supp. 2d at
877; Pl.’s Supplemental Br., at 5-6, 8. While there is no indication that Plaintiff
has brought frivolous claims here, she is incorrect to think this protects her from
the Rooker–Feldman doctrine, which constrains federal courts’ jurisdiction. Lower
federal courts may not review state-court decisions, regardless of whether the
claims involved are frivolous.
18
that the state district court's order of eviction is not final, and that the state court
proceedings are not yet concluded. This precludes the application of the Rooker–
Feldman doctrine”). Therefore, Rooker–Feldman does not apply here.
C.
Red Judicata Bars Plaintiff’s Claims
Defendants argue that summary judgment should be granted in their favor
because Plaintiff’s claim has already been litigated in state court and is therefore
barred by res judicata. Defendants assert that “the claims here . . . were already
resolved by Michigan’s 46th District Court in favor of Fannie Mae” and that
“Plaintiff cannot now re-litigate the validity of the foreclosure and sheriff’s sale.”
Def.’s Mot. for Summ. J., at 9. Plaintiff counters, arguing that because she never
raised in state court her argument that the assignment of the Mortgage was faulty,
her claim here was not “actually litigated” in state court and therefore res judicata
does not apply here. Pl.’s Mot. for Summ. J., at 2.
Federal courts are required to give full faith and credit to state-court
decisions. 28 U.S.C. § 1738. Accordingly, “[r]es judicata may bar any claims
over which the federal courts have jurisdiction, including both claims of injuries
caused by state-court judgments and general challenges to state statutes. Federal
courts must give the same preclusive effect to a state-court judgment as that
judgment receives in the rendering state.” Abbott v. Michigan, 474 F.3d 324, 330
19
(6th Cir. 2007). Accordingly, this Court must apply Michigan preclusion law in
determining whether the prior state-court foreclosure proceedings bar this suit.
In Michigan, res judicata “bars a second, subsequent action when (1) the
prior action was decided on the merits, (2) both actions involve the same parties or
their privies, and (3) the matter in the second case was, or could have been,
resolved in the first.”
Adair v. State, 680 N.W.2d 386, 396 (Mich. 2004).
Michigan does, however, recognize a limited exception to the normal res judicata
principles in foreclosure summary proceedings. Under Michigan foreclosure law,
“[t]he remedy provided by summary proceedings is in addition to, and not
exclusive of, other remedies, either legal, equitable or statutory. A judgment for
possession under [Michigan’s foreclosure] chapter does not merge or bar any other
claim for relief.” M.C.L. § 600.5750 (emphasis added).
The Michigan Supreme Court has provided guidance as to what qualifies as
an “other claim for relief.” In J.A.M. Corp. v. AARO Disposal, Inc., JAM had
leased property to AARO for a set monthly rate. 600 N.W.2d 617, 618 (1999).
When AARO stopped paying rent, JAM sought to take possession of the property
through summary proceedings.
Id.
Upon finding that JAM was neither a
Michigan corporation nor authorized to do business in Michigan -- a requirement
for the lease to be valid -- the state court found that the lease was “null and void
from its inception,” and JAM’s complaint was dismissed. Id. at 618-19. JAM then
20
filed a second state-court action in circuit court, asserting various breach of
contract and unjust enrichment claims. Id. at 619-20. AARO asserted that the new
claims were barred by res judicata because the summary proceedings had already
determined the validity of the lease. Id. at 620. The lower state courts agreed, and
dismissed JAM’s claims. Id. But the Supreme Court of Michigan reversed,
interpreting M.C.L. § 600.5750 and noting that
the Legislature’s intent [was] that summary proceedings for
possession of property be handled expeditiously. Plainly the
Legislature took [summary proceeding] cases outside the realm of the
normal rules concerning merger and bar in order that attorneys would
not be obliged to fasten all other pending claims to the swiftly moving
summary proceedings.
Id. at 621. Since JAM’s claims arose out of the same series of transactions
as the summary possession proceedings, they would normally have been
barred under Michigan’s broad res judicata principles, but under the
exception provided for in M.C.L. § 600.5750, there was no requirement that
the claims be joined to the summary proceedings -- instead they were “other
claim[s] for relief” under section 600.5750. See id. at 620-21.
The Michigan Supreme Court has also explained the limits of the notion of
“other claim[s] for relief” under M.C.L. § 600.5750. In Sewell v. Clean Cut
Management, Inc., the plaintiff rented a home from the defendant and failed to pay
her rent. 621 N.W.2d 222, 222 (2001). The defendant filed a state-court claim
21
and, through a summary proceeding, won a judgment evicting the plaintiff. Id. at
223. The plaintiff, who had been in the hospital at the time of eviction, returned to
the home and slipped and fell, sustaining injuries. Id. She then sued in state court,
alleging that the defendant had negligently maintained the premises. Id. After the
plaintiff won a jury verdict, the defendant moved for judgment notwithstanding the
verdict or, alternatively, a new trial, arguing that the earlier judgment he had won
through a summary proceeding meant that the plaintiff was a trespasser at the time
she slipped and fell, and that the summary proceeding barred relitigation of the
case through res judicata. Id. at 223-24. The circuit court denied the motion, and
the Michigan Court of Appeals affirmed, citing JAM Corp. Id. at 224.
The Michigan Supreme Court reversed, explaining the limited nature of the
M.C.L. § 600.5750 exception to res judicata:
We said in JAM Corp. that “judgment in these summary proceedings,
no matter who prevails, does not bar other claims for relief.” Nothing
in the statute or in JAM Corp. stands for the proposition that, having
litigated in the district court the issue who has the right to the
premises, that question can be relitigated de novo in a subsequent suit.
Such an approach would empty M.C.L. § 600.5701 of all significance.
After repossessing premises in accord with the statute and an order of
the district court, a landlord would remain in jeopardy of further
litigation on that same question.
...
Unlike JAM Corp., this case presents a question regarding the
preclusive effect of a claim that was actually litigated in the summary
22
proceeding. Therefore, the limited statutory exception to Michigan’s
res judicata rule does not apply.
Id. at 224-25 (citations omitted).
This case presents circumstances like those in Sewell. Here, Plaintiff’s claim
raises the same issue actually litigated in the summary proceeding: which party has
the right to possession of 24669 Lafayette.6 The summary proceeding established
that Fannie Mae is entitled to such possession. While Plaintiff presents a new
defense to that earlier action, she has not presented an “other claim” like those
presented in JAM Corp., and therefore the limited exception to res judicata
provided for in M.C.L. § 600.5750 does not apply here, and Plaintiff’s claim is
precluded.
See Foley v. City of Walled Lake, No. 11-CV-11856, 2012 WL
4449433, at *8 (E.D. Mich. Sept. 25, 2012) (finding that, where plaintiff attempted
to assert a defense to a prior summary proceeding action that awarded possession
to defendant, “Plaintiff should have asserted this defense during the summary
proceedings in the [state] court [and has] foreclosed his opportunity to rely on that
6
In support of her position that her claims were not actually litigated in the state
summary proceeding, Plaintiff cites Granderson v. US Storage Depot, No. 10001703-CK (Mich. Ct. App. Apr. 19, 2012). Granderson does not help Plaintiff,
however, because, much like JAM Corp., it involved “other claims” separate from
earlier summary eviction proceedings, such as negligence, nuisance, and
intentional infliction of emotional distress. Slip op. at 2. Relying on JAM Corp.
the Michigan Court of Appeals found that those claims were not barred by res
judicata in a subsequent suit. Slip op. at 3. But the instant case is distinct from
Granderson; it involves a single claim that is not separate from the earlier
summary proceeding, and thus Granderson is unavailing here.
23
defense here” due to res judicata); Garza v. Freddie Mac, No. 10-CV-11945, 2010
WL 4539521, at *3 (E.D. Mich. Nov. 3, 2010) (“Michigan’s exception to res
judicata in summary proceedings is narrow, and Plaintiff's claim does not fall
within it. Any challenge to the validity of the foreclosure sale should have been
raised at the summary possession proceeding. Because this Court must give full
faith and credit to the decisions of Michigan's state courts in summary proceedings,
Plaintiff's first claim is dismissed on the basis of res judicata.”).
Because res judicata bars Plaintiff’s only claim in this case, the Court need
not reach the substantive issue raised by the parties’ briefs: whether, under
Michigan law, the transfer of the Mortgage was valid.
IV. CONCLUSION
For all of the foregoing reasons,
IT IS HEREBY ORDERED that Defendants’ motion for summary judgment
(Dkt. # 15) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s motion for summary judgment
(Dkt. # 17) is DENIED.
24
IT IS FURTHER ORDERED that Plaintiff’s Complaint is DISMISSED
WITH PREJUDICE.
IT IS SO ORDERED.
Dated: September 26, 2014
s/Gerald E. Rosen
Chief, Judge, United States District Court
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on September 26, 2014, by electronic and/or ordinary
mail.
s/Julie Owens
Case Manager, (313) 234-5135
25
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?