AJAY SHAH V FLAGSTAR BANK FSB
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STATE OF MICHIGAN
COURT OF APPEALS
AJAY SHAH and BHARATI SHAH,
UNPUBLISHED
November 29, 2007
Plaintiffs-Appellants,
v
No. 272689
Oakland Circuit Court
LC No. 2005-067613-CZ
FLAGSTAR BANK, FSB,
Defendant-Appellee.
Before: Meter, P.J., and Kelly and Fort Hood, JJ.
PER CURIAM.
Plaintiffs appeal as of right from a circuit court order granting defendant’s motion for
summary disposition. We affirm in part, reverse in part, and remand. This appeal is being
decided without oral argument pursuant to MCR 7.214(E).
Plaintiffs’ complaint alleges defects in the foreclosure of their mortgage and essentially
seeks to invalidate a sheriff’s deed.
On approximately March 5, 1999, plaintiffs borrowed $385,000 from defendant to
construct a single-family residence upon a site condominium. The loan was secured by a
promissory note and mortgage. The loan was to be paid in full by January 2000, but the parties
agreed to several extensions of the loan. According to plaintiffs, they made the necessary
payments, and defendant accepted payments until November 2003, when, without explanation,
defendant began returning payments that plaintiffs tendered.
In a letter dated January 9, 2004, defendant informed plaintiffs that their failure to make
timely payments had caused a default in the mortgage and that to cure the default, “we must
receive payments for the months of October, 2003 through January, 2004, totaling $2529.13.”
The letter stated that the default must be cured “by payment in certified funds on or before thirty
(30) days from the date this letter is mailed.” It further advised that if payment was received
after “January 30, 2003 [sic],” the February 1, 2004, payment must also be included.
Plaintiffs alleged that they tendered a personal check in the amount of $2,529.13, which
was returned to them. They then sent an “Official Check,” dated February 4, 2004, drawn on
National City to defendant in the same amount, which defendant also refused. Plaintiffs alleged
that after they sent the official check, defendant claimed that the reinstatement amount was
$10,124.52. Ultimately, a sheriff’s sale for the property was held on September 28, 2004.
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Defendant acquired the property for $417,716.53. Plaintiffs did not redeem the mortgage within
the six-month redemption period.
MCL 600.3204 sets forth the prerequisites of a foreclosure by advertisement, which
include “(a) A default in a condition of the mortgage has occurred, by which the power to sell
became operative . . . .” In Bowen v Brogan, 119 Mich 218, 220; 77 NW 942 (1899), the Court
recognized that because payment on a mortgage had been made, “there was nothing due upon the
mortgage when it was foreclosed, and the right to foreclose it did not exist, and no legal title was
obtained by the foreclosure.”
The trial court granted defendant summary disposition with respect to plaintiff’s claim
that the foreclosure sale was defective because, although plaintiffs had presented several checks
as documentary evidence, plaintiffs had not presented supporting evidence that the payments
were timely sent to defendant.
Because the trial court relied on evidence outside the pleadings, we review its decision
under MCR 2.116(C)(10). Krass v Tri-County Security, Inc, 233 Mich App 661, 664-665; 593
NW2d 578 (1999). A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the
factual support of a claim. The motion should be granted if the evidence demonstrates that no
genuine issue of material fact exists, and that the moving party is entitled to judgment as a matter
of law. MacDonald v PKT, Inc, 464 Mich 322, 332; 628 NW2d 33 (2001).
Defendant, as the moving party, was required to specifically identify the matters that it
believed had no disputed factual issues, Maiden v Rozwood, 461 Mich 109, 120; 597 NW2d 817
(1999); MCR 2.116(G)(4), and had the initial burden of presenting affidavits, depositions,
admissions, or other documentary evidence in support of its motion, Quinto v Cross & Peters
Co, 451 Mich 358, 362; 547 NW2d 314 (1996); MCR 2.116(G)(5). “[T]he substance or content
of the supporting proofs must be admissible in evidence.” Maiden, supra, at 119. MCR
2.116(G)(6). This Court reviews a trial court’s decision on a motion for summary disposition de
novo. Maiden, supra.
Defendant did not produce any admissible evidence to meet its burden under MCR
2.116(G)(4). To establish that plaintiffs failed to make payments, defendant relied on its January
9, 2004, letter to plaintiffs referencing their failure to make certain payments. However, the
assertions in the letter are inadmissible hearsay when offered to establish plaintiffs’ failure to
make payments. MRE 801. Defendant also refers to an email sent by defendant’s senior vicepresident to defense counsel. However, the email is not admissible to prove the truth of the
matters asserted therein. Id. Although the signature of the vice-president on a copy of the email
was notarized, it was not the equivalent of an affidavit because the author did not swear to the
accuracy of his answers or indicate that his answers were based on personal knowledge. MCR
2.119(B).
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Even if defendant had met its burden,1 plaintiffs’ affidavits were sufficient to show a
genuine issue of material fact concerning whether the loan was in default. The trial court
referenced only the copies of the checks that plaintiffs submitted. But plaintiffs also submitted
affidavits that stated in part that plaintiffs “were not in default of such loan as all payment due
were timely made in the proper amount or were tendered to Flagstar Bank in a timely manner.”
The trial court erred in determining that defendant was entitled to summary disposition with
respect to this claim.
Plaintiffs also alleged that defendant did not provide appropriate notice of the alleged
fault before the foreclosure in accordance with the requirements of paragraph 21 of the
mortgage. That paragraph required the lender to give notice to the borrower before acceleration
and stated that the notice must specify “(a) the default; (b) the action required to cure the default;
(c) a date, not less than 30 days from the date the notice is given the Borrower, by which the
default must be cured; and (d) that failure to sure the default on or before the date specified in the
notice may result in acceleration of the sums secured by [the instrument] and sale of the
Property.” Defendant argued that the January 9, 2004, letter met these requirements. Plaintiffs
contended that the letter was defective because it required payment in certified funds (when there
is no contractual or legal basis for requiring this) and it stated the cure was required within 30
days “from the date this letter is mailed,” rather than from the date the notice is given.
The trial court did not specifically address whether defendant complied with the
requirements of paragraph 21 of the mortgage. The court observed generally that “plaintiffs are
not suing under a breach of contract count and this Court is not asked to make a legal ruling in
interpreting that contract.” Plaintiffs disagree and note that their complaint specifically alleges:
“That Defendant did breach the terms of the Mortgage, specifically Paragraph 21 thereof, in that
Defendant lender did fail to give the required appropriate and accurate notice prior to
acceleration of the indebtedness . . . .”
Although plaintiffs’ complaint was poorly drafted because it failed to set forth specific
causes of action, defendant has not shown that it was entitled to summary disposition with
respect to the assertion that defendant failed to comply with the requirements of paragraph 21 of
the mortgage. Therefore, defendant was not entitled to summary disposition with respect to that
claim.
Plaintiffs alleged that defendant did not provide proper notice of the adjournments of the
sheriff’s sale. In support of its motion, defendant produced several adjournment notices.
Plaintiffs then contended that defendant failed to present a notice calling for the sale on
September 28, 2004. Defendant attached “inadvertently overlooked notices” to its reply brief.
1
We note that defendant faulted plaintiffs for failing to provide proof of mailing. However,
defendant does not present legal authority regarding the mailbox rule. Moreover, in addition to
their affidavits, plaintiffs submitted copies of mailed envelops from defendant indicating that the
mailed checks were returned to them. Defendant failed to respond to this assertion in admissible
documentary evidence form. See MCR 2.116(G)(4)-(6).
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Absent a challenge by plaintiffs to the validity of the notice, summary disposition was properly
granted with respect to a claim that the notice of the adjournment was not given.
Plaintiffs do not challenge the trial court’s determination that they had not advanced any
argument pertinent to their assertion that defendant failed to provide information to other lenders
when plaintiffs were attempting to secure financing to purchase the home from defendant. They
also do not challenge the trial court’s ruling that they failed to set forth a cause of action under
the Michigan Consumer Protection Act. The trial court’s ruling with respect to these claims is
affirmed.
Affirmed in part, reversed in part, and remanded for further proceedings. We do not
retain jurisdiction.
/s/ Patrick M. Meter
/s/ Karen M. Fort Hood
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