Terry Rishoi v. Deutsche Bank National Trust Co., 552 F. App'x 417

Background

In 2006 Terry and Jan Rishoi obtained a $399,500 mortgage from Home Loan (later doing business as Apollo) on property in Ann Arbor; Argent and later Homeward serviced the loan.
Home Loan assigned the mortgage to Argent (2006) and Argent assigned to Deutsche Bank (2008); Citi was identified as Argent’s attorney-in-fact on the second assignment.
The Rishois defaulted and foreclosure-by-advertisement proceeded; a loan-modification notice was sent/published in October 2011 and a separate, four-week statutory “Foreclosure Notice” identifying Deutsche Bank was published in November–December 2011; Deutsche Bank purchased the property at sheriff’s sale on December 15, 2011.
The Rishois filed suit June 11, 2011 (during the six‑month redemption period), asserting wrongful foreclosure, fraud, slander/quiet title, breach of contract, and a TILA claim; defendants removed to federal court and moved to dismiss under Rule 12(b)(6).
The district court dismissed the complaint for failure to state a claim; the Sixth Circuit affirmed, holding the Rishois failed to plead the fraud or statutory irregularity (and resulting prejudice) required to set aside a sheriff’s sale after the redemption period expired.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Rishois had standing / redemption effects after sheriff’s sale	Redemption period was running but suit tolled or otherwise preserved rights	Redemption period continued; once expired plaintiff’s rights extinguished and must show fraud/irregularity + prejudice to set aside sale	Held for defendants: redemption period ran; plaintiffs lost interest and failed to plead required fraud/irregularity and prejudice
Whether Deutsche Bank or Homeward improperly foreclosed (MCL § 600.3204(3))	Deutsche Bank was not the proper foreclosing party or foreclosed in concert with servicer (Homeward) contrary to statute	Published foreclosure notice properly identified Deutsche Bank as assignee; statutory scheme permits servicer/designee disclosures	Held for defendants: foreclosure notice complied with statute; plaintiff’s argument fails
Whether Home Loan’s name change to Apollo made the mortgage improperly recorded (MCL § 600.3204(1)(c))	Name change meant mortgage listed a nonexistent mortgagee or produced an unrecorded transfer, invalidating chain	Name change alone does not create separate entities or dissolution; no evidence of distinct entities or prejudice	Held for defendants: allegation of mere name change insufficient; no prejudice shown
Whether an unrecorded assignment (Argent–Citi) broke chain of title (MCL § 600.3204(3))	Citi’s execution of assignment implies an earlier unrecorded transfer, invalidating title chain	Nonparties lack standing to attack assignment; slight irregularities don’t vitiate sale; no prejudice alleged	Held for defendants: plaintiffs lack standing and cannot show prejudice or material irregularity

Key Cases Cited

Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain sufficient factual matter to be plausible)
Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625 (6th Cir.) (de novo review of dismissal)
Conlin v. MERS, 714 F.3d 355 (6th Cir.) (applying Michigan law to state-law foreclosure claims)
Kim v. JP Morgan Chase Bank, N.A., 825 N.W.2d 329 (Mich.) (defect/irregularity makes sale voidable, not void; prejudice required)
Schulthies v. Barron, 167 N.W.2d 784 (Mich.) (must make clear showing of fraud or irregularity to set aside sheriff’s sale)
Freeman v. Wozniak, 617 N.W.2d 46 (Mich. Ct. App.) (irregularity must relate to foreclosure procedure)
Super Sulky, Inc. v. United States Trotting Ass’n, 174 F.3d 733 (6th Cir.) (state law applied to supplemental jurisdiction claims)
Barney v. PNC Bank, 714 F.3d 920 (6th Cir.) (probability not required; plausibility standard explained)
Livonia Props. Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, LLC, [citation="399 F. App'x 97"] (6th Cir.) (nonparties lack standing to challenge assignments)
Peterson v. Jacobs, 6 N.W.2d 533 (Mich.) (minor irregularities do not vitiate foreclosure sale)
El-Seblani v. Indymac Mortg. Servs., [citation="510 F. App'x 425"] (6th Cir.) (irregularity must relate to foreclosure procedure)