580 F. App'x 376
6th Cir.2014Background
- Rugiero defaulted; property sold at sheriff’s sale on May 26, 2010; Fannie Mae received quitclaim two days later. Redemption period expired Nov. 26, 2010.
- Rugiero filed Chapter 13 bankruptcy on Jan. 28, 2011.
- He filed this complaint in state court on Mar. 11, 2011 (after foreclosure and after bankruptcy); Flagstar removed and was later dismissed; remaining defendants include Nationstar and Fannie Mae.
- Defendants moved for dismissal and/or summary judgment (treated as summary judgment); Rugiero failed to respond to their factual and legal arguments and sought leave to amend.
- District court granted summary judgment: (1) Rugiero’s nonresponse justified judgment; (2) Rugiero lacked capacity/standing because his claims vested in the bankruptcy estate; (3) amendment denied as futile because the requested relief (convert nonjudicial foreclosure to judicial) is available only if suit is filed before the foreclosure sale.
- Sixth Circuit affirmed for the same reasons: nonresponse, lack of standing due to bankruptcy, and futility of amendment given foreclosure already completed and claims belonging to the trustee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff’s failure to respond to a well-supported summary judgment motion permits judgment | Rugiero argued procedural objections (timeliness) and sought leave to amend; did not rebut substance | Defendants showed no genuine dispute of material fact and presented legal grounds for judgment | Court granted summary judgment for defendants due to Rugiero’s failure to counter well-supported motion |
| Whether Rugiero had capacity/standing to sue while his Chapter 13 case was pending | Rugiero contended claims belonged to him and/or were discovered after bankruptcy; also faulted bankruptcy counsel | Defendants argued claims vested in the bankruptcy estate and only the trustee may prosecute them | Court held Rugiero lacked standing; claims vested in the trustee/estate |
| Whether the district court abused its discretion by denying leave to amend to seek conversion of the foreclosure | Rugiero sought to add claim under Mich. Comp. Laws § 600.3205c(8) to convert advertisement foreclosure to judicial | Defendants argued conversion relief is unavailable after foreclosure sale and redemption period | Court denied amendment: statute permits injunction/conversion only when suit is filed before foreclosure; foreclosure and redemption had already passed |
| Whether amendment would be futile because claims belonged to the bankruptcy estate | Rugiero argued he discovered claims post-petition or counsel erred | Defendants argued claims were pre-petition property of estate and thus only trustee could pursue them | Court held amendment would be futile; claims belonged to the bankruptcy trustee |
Key Cases Cited
- White v. Baxter Healthcare Corp., 533 F.3d 381 (6th Cir. 2008) (standard of review for summary judgment)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment requires no genuine dispute of material fact)
- Everson v. Leis, 556 F.3d 484 (6th Cir. 2009) (failure to present evidence to counter a well-supported summary judgment motion justifies judgment)
- Bauer v. Commerce Union Bank, Clarksville, Tenn., 859 F.2d 438 (6th Cir. 1988) (claims of debtor vest in trustee after bankruptcy filing)
- Auday v. Wet Seal Retail, Inc., 698 F.3d 902 (6th Cir. 2012) (bankruptcy estate owns pre-petition claims; debtor lacks standing absent abandonment)
- Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417 (6th Cir. 2000) (denial of leave to amend may be harmless where amendment would be futile)