Hurst v. Federal National Mortgage Ass'n

642 F. App'x 533
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 23, 2016
Docket15-1586
StatusUnpublished
Cited by3 cases

This text of 642 F. App'x 533 (Hurst v. Federal National Mortgage Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hurst v. Federal National Mortgage Ass'n, 642 F. App'x 533 (6th Cir. 2016).

Opinion

CLAY, Circuit Judge.

Plaintiff-Petitioner, Gwendolyn Hurst (“Plaintiff’), appeals from the district court’s orders granting Defendants’ motion to dismiss and denying Plaintiffs subsequent motion to alter or amend the judgment. Plaintiffs suit challenges the foreclosure on, and subsequent sheriffs sale of, the home in which she currently resides. Plaintiff seeks, inter alia, to quiet title and enjoin Defendants, the Federal National Mortgage Association (“Fannie Mae”) and its conservator, the Federal Housing Financing Agency (“FHFA”), from taking any action based on the sheriffs deed that Fannie Mae acquired as a result of the sheriffs sale. For the reasons set forth below, we AFFIRM the district court’s judgments.

BACKGROUND

On August 20, 2003, non-party Lue Lee Tomlin (“Tomlin”) obtained a reverse mortgage loan from non-party Financial Freedom Senior Funding Corporation. As security for the loan, Tomlin granted a mortgage to Financial Freedom on her home (“the Property”). On September 4, 2012, Financial Freedom assigned the mortgage to non-party One West Bank, FSB (“One West”). Both the mortgage and its assignment to One West were properly recorded.

*535 Prior to the at-issue foreclosure on that mortgage, Plaintiff Gwendolyn Hurst served as Tomlin’s caretaker. While acting in this capacity, Plaintiff lived in the Propei’ty with Tomlin. Plaintiffs complaint alleges that at some point, “Tomlin promised Hurst that, upon Tomlin’s death, [Hurst] could acquire the Property.” (R. 1-2 at ¶ 14.) Although Plaintiffs complaint is unclear, the record indicates that Tomlin died at some time prior to November 29, 2012, and that either Tomlin or her estate defaulted on the mortgage prior to October 29, 2012.

.One West thereafter foreclosed upon the Property pursuant to Michigan’s foreclosure by advertisement statute, M.C.L. § 600.3201 et seq,, by publishing notice of the foreclosure in a local newspaper on four occasions between October 29, 2012, and November 19, 2012. In accordance with M.C.L. § 600.3205a(3), 1 written notice was mailed to Tomlin on September 21, 2012. Notice of a forthcoming sheriffs sale was posted on the Property on November 2, 2012, and the sheriffs sale was held on November 29, 2012. At the sale, One West purchased the Property for $15,500. Less than two weeks later, One West sold its interest in the Property to Defendant Federal National Mortgage Association (“Fannie Mae”). Fannie Mae properly recorded its quitclaim deed from that sale.

Plaintiff alleges that “[b]oth prior to and subsequent to the foreclosure sale,” she “sought to acquire the Property ...' for the redemption price.” (R. 1-2 at ¶¶ 19, 23.) However, when she attempted to do so, she was told by Fannie Mae that she could not acquire the property because “she was not Tomlin’s blood relative.” (Id. at ¶ 19.) On May 29, 2013, Michigan’s six-month statutory redemption period passed with no redemption made. See M.C.L. § 600.3240. After Fannie Mae instituted eviction proceedings in September 2013, Plaintiff filed this suit in state court challenging the validity of the foreclosure and resulting sheriffs sale. Fannie Mae removed to federal court, and the parties stipulated to a stay of the eviction proceedings pending resolution of the suit.

Plaintiffs complaint alleged two defects in the foreclosure, process — namely, “failure] to serve notice on Tomlin’s estate” and an invalid chain of title, both in violation of Michigan statutes governing’ foreclosure by advertisement, M.C.L. § 600.3201 et seq. (R. 1-2 at ¶¶ 20-21, 48.) Based on these alleged defects, Plaintiff requested (1) an order rescinding the sheriffs deed and quieting title in her favor; (2) $25,000 in damages for slander of title; and (3) an injunction preventing Fannie Mae from “taking any action based upon the. Sheriffs Deed.” (Id. at ¶¶56-73.) Plaintiff also alleged a claim for relief under 42 U.S.C. § 1983, asserting that Defendants’ actions in foreclosing on the Property violated her constitutional rights under the Due Process, Equal Protection, and Privileges and Immunities Clauses of the United States Constitution.

On March 10, 2014, Defendant Fannie Mae filed a motion to dismiss Plaintiffs suit pursuant to Federal Rule of Civil Procedure 12(b)(6). After further briefing by the parties, the district court issued an opinion and order granting Fannie Mae’s motion and dismissing Plaintiffs suit. Relying on Plaintiffs allegation that “Tomlin promised Hurst that, upon Tomlin’s death, [Hurst] could acquire the property,” the district court held that Plaintiff lacked *536 standing to challenge the foreclosure proceedings. Specifically, the court interpreted Plaintiffs allegation to mean that she would merely “be able to purchase the property upon [Tomlin’s] death,” and that Plaintiff otherwise failed to allege that she possessed “any legally binding instrument that would establish” her right to challenge the foreclosure proceedings. (R. 10, PagelD 159.) However, the district court opined that even assuming Plaintiff had standing, her claims would fail on the merits because (1) Plaintiff failed to allege sufficient prejudice to challenge the sheriffs sale; and (2) as a non-governmental actor, Fannie Mae could not be held liable for constitutional violations.

On February 19, 2015, Plaintiff filed a motion to alter or amend the judgment pursuant to Federal Rules of Civil Procedure 59(e) and 60(b). Plaintiff attached an affidavit to this motion, in which she asserted that Tomlin had “orally assigned” Plaintiff “her rights with regard to her reverse mortgage and/or the Property,” and that Tomlin’s daughter, Casey Tomlin, had done the same. (R. 18, PagelD 182.) Plaintiff argued that the affidavit clarifies that she does have sufficient interest in the Property to establish standing to challenge the foreclosure. Plaintiff also attached a November 25, 2014 FHFA policy announcement relating to the sale of properties held by Fannie Mae. 2 The policy “per-mites] [Fannie Mae] to sell existing ... properties to any qualified purchaser at the property’s fair-market value, as determined by [Fannie Mae].” (Id. at 180.) Plaintiff argued that this new policy constitutes a change in law sufficient to warrant alteration of the judgment under Rules 59 and 60.

On April 17, 2015, the district court issued an opinion and order denying Plaintiffs motion to alter or amend the judgment. The court noted that “Plaintiff provide[d] no indication that any of the information provided in her affidavit was unavailable at the time of her complaint or Defendants’ motion to dismiss.” (R. 22, PagelD 249.) Similarly, the court observed that “[t]he News Release that Plaintiff relies on was issued on November 25, 2014, nearly two months before this Court’s January 22, 2015, Order granting Defendants’ Motion to Dismiss.” (Id.

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642 F. App'x 533, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hurst-v-federal-national-mortgage-assn-ca6-2016.