Can IV Packard Square LLC v. Packard Square LLC ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
CAN IV PACKARD SQUARE, LLC, FOR PUBLICATION
June 18, 2019
Plaintiff-Appellee, 9:20 a.m.
v No. 346218
Washtenaw Circuit Court
PACKARD SQUARE, LLC, LC No. 16-000990-CB
Defendant-Appellant,
and
BELDEN BRICK SALES CO., C.E. GLEESON
CONSTRUCTORS, INC., CITY ELECTRIC
SUPPLY COMPANY, QUANDEL
CONSTRUCTION SERVICES OF MICHIGAN,
INC., also known as QUANDEL
CONSTRUCTION GROUP, INC., JOHN DOES
1-100, and GAYLOR ELECTRIC, INC.,
Defendants.
Before: METER, P.J., and JANSEN and M. J. KELLY, JJ.
PER CURIAM.
Defendant-appellant, Packard Square, LLC (Packard Square), appeals as of right a
judgment of foreclosure in this action filed by plaintiff, Can IV Packard Square, LLC (Can IV),
to foreclose a mortgage on a mixed-use commercial development construction project with
respect to which Packard Square was the borrower and Can IV was the lender. Although
Packard Square challenges the merits of the trial court’s decision, we are constrained to dismiss
this appeal as moot because Packard Square failed to redeem the property as provided in MCL
600.3140.
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I. PROCEDURAL HISTORY
In October 2016, Can IV filed suit against Packard Square, alleging that Packard Square
was in default of a loan agreement it had with Can IV and seeking a judicial foreclosure on a
mortgage securing the loan. Shortly after Can IV filed its claim, on a motion from Can IV, the
trial court appointed a receiver for the property.1 The case proceeded with discovery, and Can
IV eventually moved for summary disposition, which the trial court granted on September 20,
2018. The court entered a judgment of foreclosure authorizing the sale of the property at a
sheriff’s sale.
The foreclosure sale was scheduled for November 15, 2018. On October 15, 2018,
Packard Square filed a motion to stay the foreclosure sale and the enforcement of the foreclosure
judgement entered against it. Packard Square asserted that there was good cause to grant a a stay
because the trial court erred by granting summary disposition in Can IV’s favor and entering a
judgment of foreclosure. Packard Square also contended that a stay was warranted because the
trial court failed to make any specific ruling on Packard Square’s affirmative defenses and its
counterclaims. Finally, Packard Square asserted that the failure to stay the proceedings “pending
reconsideration and appeal” would result in “irreparable harm which will be caused should the
project be sold at a Sheriff’s Sale prior a final ruling . . . .” The trial court denied the motion on
October 16, 2018.
Thereafter, on November 1, 2018, Packard Square filed a claim of appeal in this Court,
raising challenges to the trial court’s decision. On November 14, 2018—one day before the
property was to be sold at the sheriff’s sale—Packard Square filed a motion in this Court to stay
the judicial foreclosure sale. Packard Square, however, did not file a motion for immediate
consideration,2 and the motion for a stay was denied on November 30, 2018.3
1
In a prior appeal, Packard Square challenged the trial court order appointing a receiver for the
property. This Court affirmed the trial court’s decision. See Can IV Packard Square, LLC v
Packard Square, LLC, unpublished per curiam opinion of the Court of Appeals, issued January
23, 2018 (Docket No. 335512); p 11.
2
MCR 7.211(C)(6) provides:
A party may file a motion for immediate consideration to expedite hearing
on another motion. The motion must state facts showing why immediate
consideration is required. If a copy of the motion for immediate consideration
and a copy of the motion of which immediate consideration is sought are
personally served under MCR 2.107(C)(1) or (2), the motions may be submitted
to the court immediately on filing. If mail service is used, motions may not be
submitted until the first Tuesday 7 days after the date of service, unless the party
served acknowledges receipt. The trial court or tribunal record need not be
requested unless it is required as to the motion of which immediate consideration
is sought.
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On December 18, 2018, Packard Square filed a motion in this Court to stay the effect of
MCL 600.31404 during the pendency of its appeal or, alternatively, to expedite its appeal.
Packard Square also filed a motion for immediate consideration. Packard Square, however,
failed to cure defects with its December 18, 2018 motion, so this Court entered an order striking
the motion. 5
On January 15, 2019, Packard Square filed a motion to expedite its appeal, arguing that if
a decision by this Court was not issued before May 15, 2019, the issues it was raising on appeal
would “in essence, become moot.” On January 22, 2019, this Court granted Packard Square’s
motion to expedite its appeal. 6
On May 10, 2019, Packard Square filed a motion to stay transfer of the property.
Packard Square noted that the statutory redemption period provided by MCL 600.3140 was set to
expire on May 15, 2019, and it argued that after the redemption period expired Can IV would be
free to transfer title of the property to any third party, which would result in material prejudice to
Packard Square. The motion, however, was stricken by this Court because Packard Square failed
to cure defects with it.7
II. EXPIRATION OF REDEMPTION PERIOD
A. STANDARD OF REVIEW
In a supplemental brief, Can IV argues that the issues raised by Packard Square on appeal
are moot because the six-month redemption period in MCL 600.3140 expired on May 15, 2019.
In response, Packard Square contends that it has standing to challenge the foreclosure
proceedings. “The applicability of a legal doctrine, such as mootness, is a question of law which
this Court reviews de novo. TM v MZ, 501 Mich. 312, 315; 916 NW2d 473 (2018) (quotation
marks, alterations, and citation omitted). And, because “Michigan Courts exist to decide actual
cases and controversies,” “[t]he question of mootness is a threshold issue that a court must
address before it reaches the substantive issues of a case.” In re Tchakarova, ___ Mich App ___,
___; ___ NW2d ___ (2019) (Docket No. 345739); slip op at 3. “[A]s a general rule, this Court
will not entertain moot issues or decide moot cases.” East Grand Rapids Sch Dist v Kent Co Tax
3
Can IV Packard Square, LLC v Packard Square, LLC, unpublished order of the Court of
Appeals, entered November 30, 2018 (Docket No. 346218).
4
As will be discussed later in this opinion, MCL 600.3140(1) permits a mortgagor to redeem the
property by paying the amount bid plus interest within 6 months of a foreclosure sale.
5
Can IV Packard Square, LLC v Packard Square, LLC, unpublished order of the Court of
Appeals, entered January 8, 2019 (Docket No. 346218).
6
Can IV Packard Square, LLC v Packard Square, LLC, unpublished order of the Court of
Appeals, entered January 22, 2019 (Docket No. 346218).
7
Can IV Packard Square, LLC v Packard Square, LLC, unpublished order of the Court of
Appeals, entered May 29, 2019 (Docket No. 346218).
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Allocation Bd, 415 Mich. 381, 390; 330 NW2d 7 (1982). “Whether a party has standing is a
question of law subject to review de novo.” Groves v Dep't of Corrections, 295 Mich. App. 1, 4;
811 NW2d 563 (2011). Issues of statutory interpretation are also reviewed de novo. W A Foote
Mem Hosp v Mich Assigned Claims Plan, 321 Mich. App. 159, 168; 909 NW2d 38 (2017).
B. ANALYSIS
MCL 600.3140(1) sets forth a statutory redemption period for a mortgagor who has lost
his or her property during a judicial foreclosure. It provides in relevant part:
The mortgagor . . . may redeem the entire premises sold as ordered under
section 3115 by paying, within 6 months after the sale, to the purchaser or the
purchaser’s personal representative or assigns, or to the register of deeds in whose
office the deed of sale is deposited as provided in the court rules, for the benefit of
the purchaser, the amount that was bid with interest from the date of the sale at
the interest rate provided for by the mortgage. [MCL 600.3140(1).]
Also relevant to judicial foreclosures, MCL 600.3130 provides that if the property is not
redeemed during the redemption period, “the deed shall become operative as to all parcels not
redeemed, and shall vest in the grantee named in the deed, his heirs, or assigns all the right, title,
and interest which the mortgagor had at the time of the execution of the mortgage or at any time
thereafter.” This Court has not had occasion to determine whether a mortgagor’s failure to
redeem a property within the time limit provided by MCL 600.3140(1) results in the
extinguishment of all the mortgagor’s rights in and to the foreclosed property.
However, in Bryan v JPMorgan Chase Bank, 304 Mich. App. 708, 713; 848 NW2d 482
(2014), this Court held that with regard to a foreclosure by advertisement, a mortgagor’s failure
to avail him or herself of the right of redemption provided in MCL 600.3236 extinguishes all the
mortgagor’s rights in and to the property. In Bryan, the defendant argued that the plaintiff lacked
standing to bring an action challenging a foreclosure by advertisement because the redemption
period in MCL 600.3240 had expired without plaintiff attempting to redeem the property. Id.
This Court agreed, reasoning:
Pursuant to MCL 600.3240, after a sheriff’s sale is completed, a
mortgagor may redeem the property by paying the requisite amount within the
prescribed time limit, which here was six months. “Unless the premises described
in such deed shall be redeemed within the time limited for such redemption as
hereinafter provided, such deed shall thereupon become operative, and shall vest
in the grantee therein named, his heirs or assigns, all the right, title, and interest
which the mortgagor had at the time of the execution of the mortgage, or at any
time thereafter . . . .” MCL 600.3236. If a mortgagor fails to avail him or herself
of the right of redemption, all the mortgagor’s rights in and to the property are
extinguished. Piotrowski v State Land Office Bd, 302 Mich. 179, 187; 4 NW2d
514 (1942).
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We have reached this conclusion in a number of unpublished cases and,
while unpublished cases are not precedentially binding, MCR 7.215(C)(1), we
find the analysis and reasoning in each of the following cases to be compelling.
Accordingly, we adopt their reasoning as our own. See Overton v Mtg Electronic
Registration Sys, unpublished opinion per curiam of the Court of Appeals, issued
May 28, 2009 (Docket No. 284950), p 2 (“The law in Michigan does not allow an
equitable extension of the period to redeem from a statutory foreclosure sale in
connection with a mortgage foreclosed by advertisement and posting of notice in
the absence of a clear showing of fraud, or irregularity. Once the redemption
period expired, all of plaintiff’s rights in and title to the property were
extinguished.”) (citation and quotation marks omitted); Hardwick v HSBC Bank
USA, unpublished opinion per curiam of the Court of Appeals, issued July 23,
2013 (Docket No. 310191), p 2 (“Plaintiffs lost all interest in the subject property
when the redemption period expired . . . . Moreover, it does not matter that
plaintiffs actually filed this action one week before the redemption period ended.
The filing of this action was insufficient to toll the redemption period. . . . Once
the redemption period expired, all plaintiffs’ rights in the subject property were
extinguished.”); BAC Home Loans Servicing, LP v Lundin, unpublished opinion
per curiam of the Court of Appeals, issued May 23, 2013 (Docket No. 309048), p.
4, 2013 (“[O]nce the redemption period expired, [plaintiff’s] rights in and to the
property were extinguished. . . . Because [plaintiff] had no interest in the subject
matter of the controversy [by virtue of MCL 600.3236], he lacked standing to
assert his claims challenging the foreclosure sale.”); Awad v Gen Motors
Acceptance Corp, unpublished opinion per curiam of the Court of Appeals, issued
April 24, 2012 (Docket No. 302692), pp 5-6, 2012 (“Although she filed suit
before expiration of the redemption period, [plaintiff] made no attempt to stay or
otherwise challenge the foreclosure and redemption sale. Upon the expiration of
the redemption period, all of [plaintiff’s] rights in and title to the property were
extinguished, and she no longer had a legal cause of action to establish
standing.”). We hold that by failing to redeem the property within the applicable
time, plaintiff lost standing to bring her claim. [Id. at 713-715.]
On appeal, Packard Square asserts that, although Bryan expressly states that a
mortgagor’s failure to redeem the property within the redemption period results in the
extinguishment of all the mortgagor’s rights in and to the property, Bryan only address
foreclosures by advertisement, whereas the foreclosure in this case is a judicial foreclosure. The
distinction, however, is irrelevant under the circumstances. MCL 600.3240 sets forth the
redemption period available to a mortgagor when a foreclosure by advertisement is conducted.
MCL 600.3140 sets forth the redemption period available to a mortgagor when a judicial
foreclosure is conducted. Significantly, both statutes allow a mortgagor to “redeem” the
property by paying a requisite amount within the prescribed time limit. MCL 600.3240; MCL
600.3140. Furthermore, both statutes expressly address the consequences of a mortgagor’s
failure to redeem within the redemption period. With regard to foreclosures by advertisement,
MCL 600.3236 provides in relevant part, “[u]nless the premises described in such deed shall be
redeemed within the time limited for such redemption as hereinafter provided, such deed shall
thereupon become operative, and shall vest in the grantee therein named, his heirs or assigns, all
the right, title, and interest which the mortgagor had at the time of the execution of the mortgage,
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or at any time thereafter . . . .” And, with regard to a judicial foreclosure, MCL 600.3130
provides that, “[u]nless the premises or any parcel of them are redeemed within the time limited
for redemption the deed shall become operative as to all parcels not redeemed, and shall vest in
the grantee named in the deed, his heirs, or assigns all the right, title, and interest which the
mortgagor had at the time of the execution of the mortgage or at any time thereafter.”
Comparing the statutory language in MCL 600.3130 with the language in MCL 600.3236, it is
plain that the legislature intended that, in both circumstances, a mortgagor would have a set
period of time to redeem the property and that the failure to do so would result in the
extinguishment of the mortgagor’s rights in and to the property. See The Cadle Co v Kentwood,
285 Mich. App. 240, 249; 776 NW2d 145 (2009) (stating that identical language used in various
provisions of the same act should be construed identically). Accordingly, we conclude that
under MCL 600.3130, if a mortgagor fails to avail itself of the right of redemption, all the
mortgagor’s rights in and to the property are extinguished. See Bryan, 304 Mich. App. at 713;
Piotrowski v State Land Office Bd, 302 Mich. at 187.
Packard Square suggests that, because it held an interest in the property for over a
decade, it clearly retains standing to challenge the foreclosure proceedings in this case. In
support, it directs this Court to our Supreme Court’s decision in Lansing Schools Edu Ass’n v
Lansing Bd of Edu, 487 Mich. 349; 792 NW2d 686 (2010). We need not address, however,
whether Packard Square has standing to challenge the trial court’s foreclosure decision.
Although the Bryan Court determined that the plaintiff lacked standing to pursue her claim
because the statutory expiration period had expired before she filed her claim, see Bryan, 304
Mich. App. at 710-711, 715, it is undisputed that in this case at the time that the action was
initiated, Packard Square had an interest in the property and standing to challenge the trial
court’s decision to enter a judgment of foreclosure. On appeal, Can IV does not argue that
Packard Square does not have standing. It instead argues that because Packard Square did not
redeem the property in the six-month redemption period set forth in MCL 600.3140, pursuant to
MCL 600.3130, the deed Can IV received at the sheriff’s sale “become operative as to all parcels
not redeemed, and shall vest in the grantee named in the deed, his heirs, or assigns all the right,
title, and interest which the mortgagor had at the time of the execution of the mortgage or at any
time thereafter.” In other words, Can IV argues that even if this Court were to conclude that
Packard Square was entitled to relief, because all right, title, and interest Packard Square once
held in the property has now vested in Can IV, there is no relief that this Court can grant Packard
Square. We agree. Under MCL 600.3140 and MCL 600.3130, Packard Square’s failure to
redeem the property within the redemption period resulted in the extinguishment of all of
Packard Square’s rights in and to the property. There remains no relief that this Court can grant
it on appeal, so this appeal is moot. See Tenneco Inc v Amerisure Mut Ins Co, 281 Mich. App.
429, 472; 761 NW2d 846 (2008) (stating that an issue becomes moot when an event occurs that
renders it impossible for the reviewing court to grant relief).
Dismissed as moot. As the prevailing party, Can IV may tax costs under MCR 7.219(A).
/s/ Patrick M. Meter
/s/ Kathleen Jansen
/s/ Michael J. Kelly
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