Richard v. Schneiderman & Sherman, PC
818 N.W.2d 334
Mich. Ct. App.2011Background
- Plaintiff Aaron Richard owned property at 19952 Hubbell in Detroit; he bought with a $50,000 loan from Homecomings Financial Network, secured by a May 4, 2006 mortgage with MERS as nominee.
- Default on mortgage occurred by 2009; GMAC’s agent Schneiderman mailed a default notice on October 9, 2009 listing $50,267.78 owed and rights to mediation.
- MERS initiated nonjudicial foreclosure by advertisement under MCL 600.3201 et seq. and purchased the property at the sheriff's sale.
- Richard filed suit during the redemption period alleging the sheriff's sale was flawed and that MERS had no rights to the debt.
- Trial court granted summary disposition for defendants, dismissing Richard's claims.
- Court held MERS could not foreclose by advertisement when it did not own the underlying note, applicable under Saurman, and reversed, vacating the foreclosure and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can MERS foreclose by advertisement without owning the note? | Richard argues MERS lacked authority to foreclose by advertisement. | Schneiderman/GMAC contend foreclosure by advertisement was proper. | Foreclosure by advertisement void ab initio due to MERS not owning the note. |
| Retroactivity of Saurman and its application here? | Saurman should apply fully to Richard's case. | Saurman applies only with limited retroactivity. | Saurman applied with full retroactivity to render foreclosure void ab initio in this case. |
| Whether Richard preserved the MERS authority issue for retroactive relief? | Issue raised during redemption; preserved. | Issue not explicitly preserved; may limit retroactivity. | Nonetheless, Richard's challenge during redemption and lack of bona fide purchaser allow Saurman relief. |
| Effect of a bona fide purchaser on validity of foreclosure by advertisement? | If there were a bona fide purchaser, Saurman might not apply. | Foreclosure validity still controlled by challenged authority. | Foreclosure void ab initio because no bona fide purchaser defeated application of Saurman. |
Key Cases Cited
- Residential Funding Co, LLC v Saurman, 292 Mich App 321 (2011) (MERS cannot foreclose by advertisement unless it owns the note; foreclosure void ab initio)
- Hyde v Univ of Mich Bd of Regents, 426 Mich 223 (1986) (retroactivity of judicial decisions; complete retroactivity generally)
- White v Burkhardt, 338 Mich 235 (1953) (challenges to foreclosure by advertisement must be timely)
- Fox v Jacobs, 289 Mich 619 (1939) (timeliness of challenging foreclosures by advertisement)
- Hogan v Hester Investment Co, 257 Mich 627 (1932) (validity of foreclosure by advertisement cannot be challenged after sale to bona fide purchaser)
- Harper v Virginia Dep’t of Taxation, 509 U.S. 86 (1993) (public policy considerations in tax assessment contexts; not directly controlling here but cited on retroactivity principles)
- Rowland v Washtenaw Co Rd Comm, 477 Mich 197 (2007) (new legal principles may not be “new rules” for purposes of retroactivity)
- McNeel v Farm Bureau Gen Ins Co of Mich, 289 Mich App 76 (2010) (retroactivity framework in Michigan Court of Appeals)
- Pohutski v City of Allen Park, 465 Mich 675 (2002) (statutory interpretation and retroactivity considerations)