Oraibe Breadiy v. PNC Mortgage Company

NOT RECOMMENDED FOR PUBLICATION
File Name: 15a0492n.06
No. 14-2347
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
EMAD BREADIY and ORAIBE BREADIY, ) FILED
) Jul 10, 2015
Plaintiffs-Appellants, ) DEBORAH S. HUNT, Clerk
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
PNC MORTGAGE COMPANY, ) COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
Defendant-Appellee. )
)
)
BEFORE: BOGGS and BATCHELDER, Circuit Judges, and HUCK, District Judge.*
HUCK, District Judge.
In this mortgage-foreclosure case, Emad and Oraibe Breadiy (Appellants) appeal the
district court’s grant of summary judgment to PNC Bank, N.A.1 (PNC) on their claims for
violation of Mich. Comp. Laws § 3205c, to quiet title, and to enjoin PNC from foreclosing-by-
advertisement on Appellants’ property. We have jurisdiction under 28 U.S.C. § 1291. Because
Appellants had previously defaulted on a loan modification within one year of its execution, the
district court correctly concluded that Mich. Comp. Laws §§ 600.3205a and 600.3205c, by their
*
The Honorable Paul C. Huck, U.S. District Judge for the Southern District of Florida,
sitting by designation.
1
While Appellant has designated “PNC Mortgage, National Association” as the
defendant, Appellee states that the real party in interest is actually PNC Bank, National
Association.
No. 14-2347,
Breadiy v. PNC Mortgage, N.A.
own clear terms, did not apply to PNC Bank’s foreclosure-by-advertisement of Appellants’
property. Therefore, we affirm.
Appellants entered into a loan with PNC on January 2, 2009, to purchase real property
located in the Township of Pittsfield, Michigan. PNC’s mortgage interest in the property secured
the loan. Appellants quickly fell behind on their payments, and by September 2009, were in
default. Over the next two years, PNC modified the terms of Appellants’ mortgage loan several
times, and each time, Appellants defaulted. First, in March 2010, PNC offered Appellants a
repayment agreement, upon which Appellants failed to make a single payment. Second, in
March 2011, the parties executed a loan-modification agreement reducing the interest rate on
Appellants’ loan. Appellants defaulted on the loan modification as of September 2011. The
following month, October 2011, PNC initiated foreclosure-by-advertisement on Appellants’
property by serving notice on Appellants and scheduling a sheriff’s sale. However, PNC
suspended the foreclosure upon receiving Appellants’ request for another modification of their
mortgage loan. In February 2012, PNC pre-approved Appellants for this additional loan
modification, but only on the precondition that Appellants first complete a trial repayment plan.
Unsurprisingly, Appellants failed to make even the first payment due under the trial plan.
Based on Appellants’ failure to meet the terms of PNC’s trial repayment plan, PNC
denied Appellants’ request for an additional loan modification and informed them by letter that
“[i]f foreclosure activity was previously suspended on your loan, it has now resumed.” PNC
resumed the foreclosure-by-advertisement proceedings that it had suspended, rescheduled the
sheriff’s sale of Appellants’ property for May 17, 2012, and purchased the property at the sale.
Appellants filed this suit on December 7, 2012, in Washtenaw County Circuit Court, seeking to
quiet title based on PNC’s alleged breach of Mich. Comp. Laws § 600.3205c and to enjoin
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No. 14-2347,
Breadiy v. PNC Mortgage, N.A.
PNC’s already-concluded foreclosure-by-advertisement. PNC removed to the United States
District Court for the Eastern District of Michigan on January 15, 2013, under 28 U.S.C. § 1332.
PNC moved for summary judgment on October 7, 2013, arguing, inter alia, that § 600.3205c did
not apply to Appellants’ complaint. The district court granted the motion on September 19,
2014. This appeal followed.
“We review de novo the district court’s decision, applying the same Fed. R. Civ. P. 56
summary judgment standard used by the district court.” Shelby Cnty. Health Care Corp. v. S.
Council of Indus. Workers Health and Welfare Trust Fund, 203 F.3d 926, 933 (6th Cir. 2000).
Summary judgment is appropriate if “there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
The Michigan legislature enacted Mich. Comp. Laws §§ 600.3205a through 600.3205d
“to assist homeowners facing loss of their homes as a result of the mortgage crisis that began in
2008 . . . .” Robinson v. Select Portfolio Servicing, Inc., 522 F. App’x 309, 311–12 (6th Cir.
2013). Sections 600.3205a through 600.3205d, which were repealed effective June 30, 2013,
provided homeowners in default on their mortgage loans with protections such as detailed
written notice of the pending foreclosure and the borrower’s rights, Mich. Comp. Laws §
600.3205a(1)(a)-(h), and the option of meeting with a designated housing counselor to work out
a loan modification, id. §§ 600.3205b & 600.3205c. Appellants contend that these provisions
governed PNC’s foreclosure-by-advertisement on their property, but the statute itself clearly
indicates otherwise.
Under Mich. Comp. Laws § 600.3205a(6), “[i]f the borrower . . . previously agreed to
modify the mortgage loan,” then §§ 3205a, 3205b, and 3205c “do not apply unless the borrower
has complied with the terms of the mortgage loan, as modified, for 1 year after the date of the
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No. 14-2347,
Breadiy v. PNC Mortgage, N.A.
modification.” It is undisputed that Appellants—in addition to defaulting on a modified
repayment plan and a trial repayment plan—executed a loan-modification agreement in March
2011, which was in default within six months. Therefore, because Appellants did not comply
with the terms of their modified mortgage loan for at least one year, § 600.3205a excused PNC
from complying with the statute’s notice and loan-modification workout provisions. See
Robinson, 522 F. App’x at 312 (“Plaintiffs did not comply with the terms of the [modified]
mortgage for a full year, and that failure excuses Defendants from compliance with the loan
modification requirements in § 600.3250c.” (quotations omitted)). In other words, Appellants’
argument that PNC was subject to §§ 600.3205a and 600.3205c is plainly contradicted by the
clear text of the statute itself, and is entirely without merit.
Appellants also argue that PNC violated §§ 3205a and 3205c by failing to respond with a
denial in writing to Appellants’ request for a change in the monthly amount due under PNC’s
trial repayment plan; by failing to inform Appellants that PNC’s counsel was proceeding with the
foreclosure when Appellants requested a modification of the trial repayment plan; and by failing
to notify Appellants of the foreclosure-by-advertisement and sheriff’s sale of their home.
However, because the protections afforded to borrowers under § 600.3205c did not apply to
Appellants, we decline to address these additional arguments on PNC’s alleged non-compliance
with the statute. Rather, we hold that the district court properly found that PNC was not subject
to § 600.3205c in its foreclosure-by-advertisement of Appellants’ property, and therefore was
entitled to summary judgment on Appellants’ claim that PNC violated that provision. We
conclude that the district court also properly granted summary judgment on Appellants’ quiet-
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No. 14-2347,
Breadiy v. PNC Mortgage, N.A.
title and injunction claims, because neither claim provided an independent basis for relief, absent
a showing that PNC had violated § 600.3205c.2
We finally note that we have considered ordering Appellants’ counsel to show cause why
sanctions should not be imposed in this case under Federal Rule of Appellate Procedure 38. We
do not wish to discourage borrowers from marshaling any appropriate arguments to contest the
forced sale of their homes, but we do insist that an attorney representing a borrower who is
subject to a foreclosure-by-advertisement under Michigan law present a good-faith legal basis for
challenging it. In this case, Appellants’ counsel has invoked provisions of Mich. Comp. Laws
§ 600.3205c that have absolutely no application to the foreclosure at issue under their own plain,
easily understandable terms. In other words, Appellants’ arguments to the district court and to
this court were meritless and frivolous.
We note Appellants’ counsel argued the same frivolous legal theory in Robinson v. Select
Portfolio Servicing, Inc., which, as discussed above, this court unequivocally rejected in an
unpublished decision dated April 9, 2013. See 522 F. App’x at 311–12. Significantly, we
released our decision in Robinson six months before PNC moved for summary judgment in the
district court, in this case. And yet, despite being placed on clear notice by the Robinson
decision that § 600.3205c has no application to a case in which a borrower previously executed
and defaulted within one year on a mortgage-loan modification, Appellant raised the same
argument to the district court and to this court without attempting to distinguish Robinson or,
2
The district court also found that, even if § 600.3205c did apply, Appellants would still
not be entitled to the relief they sought, because Appellants did not challenge the sheriff’s sale of
their property within the statutory redemption period, and § 600.3205c does not provide the
remedies sought by Appellants. However, because we find that § 600.3205c did not apply to the
foreclosure-by-advertisement on Appellants’ property, based on Appellants’ default on a
previous loan modification agreement, we need not reach the merits of these alternative bases for
summary judgment in PNC’s favor.
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Breadiy v. PNC Mortgage, N.A.
indeed, without even mentioning the decision. We also note that at least one district court has
found Appellants’ counsel’s argument on a mortgage-lender’s purported breach of § 600.3205c
to be “factually frivolous,” because—as in this case—the facts clearly demonstrated that the
statute did not apply to the borrower’s case. See Hubbard v. Washington Mut. Bank, F.A., No.
11-12707, 2014 WL 495412, at *5 (E.D. Mich. Feb. 6, 2014), aff’d, 581 F. App’x 539 (6th Cir.
2014).
This is probably sufficient to warrant the sua sponte imposition of sanctions, as we have
previously held that an appeal is sanctionable where it “was prosecuted with no reasonable
expectation of altering the district court’s judgment and for purposes of delay or harassment or
out of sheer obstinacy.” Wilton Corp. v. Ashland Castings Corp., 188 F.3d 670, 676 (6th Cir.
1999) (quoting Allinder v. Inter-City Prods. Corp. (USA), 152 F.3d 544, 552 (6th Cir. 1998)).
However, because PNC has not moved for sanctions, and because Appellants’ counsel did not
have the benefit of the warning that this opinion provides, we decline to impose sanctions at this
time. This opinion should provide readily apparent notice that this court may be willing to
impose sanctions in the future, should Appellants’ counsel continue to challenge foreclosures-by-
advertisement by relying on provisions of Mich. Comp. Laws § 600.3205c that clearly do not
apply.
The judgment of the district court is therefore AFFIRMED.
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