Diem v. Sallie Mae Home Loans, Inc
307 Mich. App. 204
| Mich. Ct. App. | 2014Background
- In 2003 Philip Diem borrowed $300,000; note permitted transfers and mortgage named MERS as nominee for the lender.
- Diem defaulted in 2010; Orlans Associates (counsel) recorded an affidavit correcting a scrivener’s error and stating an assignment to JPMorgan Chase, though the recorded assignment was dated later.
- JPMorgan Chase initiated foreclosure by advertisement, purchased the property at sheriff’s sale in February 2012, and later conveyed its interest to Fannie Mae. Diem did not redeem.
- Diem sued (shortly before redemption expired) alleging wrongful foreclosure, negligence, fraud/conversion, and challenged parties’ real-party-in-interest status.
- Circuit court granted summary disposition for defendants, denied leave to amend (including proposed FDCPA and due-process claims), and consolidated a possession action; Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of foreclosure by advertisement | Assignment from MERS to JPMorgan was invalid; foreclosing party lacked title/standing | Even if procedural defects occurred, sale is only voidable and plaintiff must plead prejudice | Dismissed: plaintiff failed to allege required prejudice or causal link under Kim |
| Prejudice required to void sale | Diem claimed defendants’ misrepresentations prevented him from challenging sale before sheriff’s sale | Defendants: Diem knew of changes by Oct 2011 and made no effort to redeem; no factual showing of lost opportunity | Dismissed: allegations of prejudice were conclusory and not causally connected to defendants’ actions |
| Negligence and fraud claims | Misleading filings and affidavits caused damages and reliance | Must plead proximate causation and actual damages from reliance; no such facts pled | Dismissed: failed to plead causation/damages from reliance |
| Motion to amend (FDCPA, due process) | Proposed amendments would show prejudice and add viable FDCPA/due-process claims | Amendment was unduly delayed, prejudicial, and futile; due-process claim against Fannie Mae lacks merit | Denied: undue delay, prejudice, and futility; due-process claim barred as matter of law |
Key Cases Cited
- Kim v. JPMorgan Chase Bank, N.A., 493 Mich. 98 (Michigan Supreme Court) (establishes that foreclosure by advertisement is voidable and plaintiff must show prejudice and causal link to set aside sale)
- LaFontaine Saline, Inc. v. Chrysler Group, LLC, 496 Mich. 26 (Michigan Supreme Court) (standard of review for MCR 2.116(C)(8))
- Kuschinski v. Equitable & Central Trust Co., 277 Mich. 23 (Michigan Supreme Court) (example of prejudice factors in foreclosure challenges)
- Sweet Air Investment, Inc. v. Kenney, 275 Mich. App. 492 (Michigan Court of Appeals) (failure to redeem and delay can defeat a wrongful-foreclosure claim)
- Conlin v. Mortgage Electronic Registration Sys., Inc., 714 F.3d 355 (6th Cir.) (mortgagor must show prejudice to prevail on wrongful-foreclosure challenge)