Raad Jarbo v. The Bank of New York Mellon

NOT RECOMMENDED FOR PUBLICATION
File Name: 14a0762n.06

No. 14-1023

UNITED STATES COURTS OF APPEALS
FOR THE SIXTH CIRCUIT

RAAD JARBO and WISAL JARBO, ) FILED
) Oct 03, 2014
Plaintiffs-Appellants, ) DEBORAH S. HUNT, Clerk
)
v. )
)
ON APPEAL FROM THE
THE BANK OF NEW YORK MELLON f/k/a The )
UNITED STATES DISTRICT
Bank of New York, as Trustee for the Certificate )
COURT FOR THE EASTERN
Holders of CWALT Inc., Alternative Loan Trust )
DISTRICT OF MICHIGAN
2007-9T1, Mortgage Pass-Through Certificates, )
Series 2007-9T1, )

Defendant-Appellee.

BEFORE: GUY, ROGERS, and DONALD, Circuit Judges.

ROGERS, Circuit Judge

Defendant Bank of New York Mellon foreclosed on a second home mortgaged by Bushra

Halbo and her sister, plaintiff Wisal Jarbo. Rather than attempting to redeem the property, Jarbo

and her husband waited almost six months and then brought this action contesting the

foreclosure. Plaintiffs lack a viable claim, however, because Michigan law extinguishes a

mortgagor’s rights to the mortgaged property after the six-month statutory redemption period

expires, and because plaintiffs cannot show that their position to redeem the property would have

improved absent the alleged irregularities in the foreclosure process. The district court thus

properly granted BNYM’s motion to dismiss.
No. 14-1023
Jarbo v. Bank of New York Mellon

On January 18, 2007, Bushra Halbo and her sister, plaintiff Wisal Jarbo (Wisal), were

deeded a specific property located on Carillon Drive in Bloomfield Hills Township, Michigan.

Just over a month later, Halbo obtained a $776,000 loan from America’s Wholesale Corporation.

As security for the loan, Halbo and Wisal granted a mortgage on the property to Mortgage

Electronic Registration Systems, Inc. (MERS). Because Wisal did not sign the note

accompanying the mortgage, she was not “personally obligated to pay the sums secured by [the

mortgage], but agreed to ‘mortgage, grant and convey [her] interest in the Property.’” As part of

the mortgage, Halbo and Wisal also executed a second-home rider, acknowledging that they

would use the property as a “second home” and that they would be in default if that

representation was false. The mortgage lists Halbo and Wisal’s primary address as 418 Avenida

Abajo, El Cajon, CA 92020. The mortgage was recorded on March 21, 2007, in the Oakland

County Register of Deeds.

On October 8, 2008, Halbo modified the loan to include past due payments and interest

that had accrued on the loan due to non-payment. As of December 1, 2008, the modified balance

of the loan was $812,938.25. On February 10, 2010, MERS assigned the mortgage to defendant

Bank of New York Mellon (BNYM) and the assignment was recorded in the Oakland County

Halbo and Wisal defaulted on the modified loan and, on March 9, 2010, BNYM’s

servicing agent initiated foreclosure-by-advertisement proceedings. Halbo filed an action to

prohibit the foreclosure, although the Oakland County Circuit Court eventually dismissed it with

prejudice. On May 31, 2010, BNYM re-initiated foreclosure proceedings, sending Halbo and

Wisal written notice of its intent to foreclose. Neither Halbo nor Wisal responded. Between July

16 and August 6, 2012, BNYM published notice of the foreclosure sale in the Oakland County

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No. 14-1023
Jarbo v. Bank of New York Mellon

Legal news on four separate occasions, and also posted notice of the sale on the property. On

August 14, 2012, at the foreclosure sale, BNYM bought the property for $1,083,303.30.

Under Michigan law, once BNYM purchased the property, Halbo and Wisal had six

months to redeem it. Mich. Comp. Laws § 600.3240(1). But neither Halbo nor Wisal attempted

to do so. Instead, on February 8, 2013, with just six days remaining on the statutory redemption

period, Wisal and her husband, Raad Jarbo, filed this suit in Oakland County Circuit Court,

alleging various improprieties in the foreclosure process. Five days later, on the eve of the

expiration of the redemption period, they filed a motion to enjoin the expiration of the

redemption period. On February 14, 2013—the day the redemption period expired—the

Oakland County Circuit Court denied the Jarbos’ motion.

BNYM subsequently removed the matter to the United States District Court for the

Eastern District of Michigan and moved to dismiss all counts of the complaint. On October 22,

2013, the district court granted BNYM’s motion and dismissed the Jarbos’ complaint. The

Jarbos moved for reconsideration, which motion the district court denied on November 26, 2013.

This appeal followed.

Dismissal of the Jarbos’ suit was proper because, under Michigan law, the Jarbos lost any

interest they had in the property when the six-month statutory redemption period expired.

Michigan law explicitly provides that mortgagors of residential properties have six months from

the date of the sheriff’s sale to redeem the property. Mich. Comp. Laws § 600.3240(1), (8).

When the six-month period expires, the mortgagor forfeits any right, title, or interest he or she

had in the property. Mich. Comp. Laws § 600.3236; Piotrowski v. State Land Office Bd.,

4 N.W.2d 514, 517 (Mich. 1942). The Jarbos do not dispute that the redemption period for the

property expired on February 14, 2013, and that they had not redeemed the property by that date.

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No. 14-1023
Jarbo v. Bank of New York Mellon

Under Michigan law, then, they have forfeited any right, title, or interest they once had in the

property.

There is a judicially-created exception to the redemption rule, but this case does not fit

within it. The exception allows courts to extend the statutory redemption period where a party

clearly shows fraud or irregularities in the foreclosure process that actually prejudiced the

mortgagor in preserving his or her interest in the property. Khoshiko v. Deutsche Bank Trust Co.

Ams., --- F. App’x ----, 2014 WL 3608741, at *1 (6th Cir. July 22, 2014). The Jarbos, however,

have not said how BNYM’s alleged malfeasance prejudiced them in retaining their interest in the

property. They assert that their “injuries are clear” and that they “lost title to the [property],” but

fail to explain how they would have been in a better position to keep the property absent the

alleged defects. Barring some showing of prejudice—the burden of which rests on the Jarbos—

the six-month statutory redemption period is a rigid bar, see Conlin v. Mortgage Elec.

Registration Sys., Inc., 714 F.3d 355, 359-60 (6th Cir. 2013), one that, in this case, forecloses the

Jarbos’ challenge to BNYM’s foreclosure.

The Jarbos’ counter-arguments lack merit. First, the Jarbos assert a quiet title claim, but

quiet title is a remedy, not a freestanding claim. Goryoka v. Quicken Loan, Inc., 519 F. App’x

926, 928 (6th Cir. 2013). Like a request for an injunction or disgorgement, a request for quiet

title is only cognizable when paired with some recognized cause of action. Because the Jarbos

assert their quiet title claim as a discrete count, the district court was correct to dismiss it.

There is also nothing to the Jarbos’ argument that BNYM lacked standing to foreclose.

In Michigan, a mortgagee has standing to foreclose so long as: (1) the public record shows that

the mortgage passed to the foreclosing party, and (2) the record chain of title is not destroyed by

an irregularity affecting the validity of a transfer. Mich. Comp. Laws § 600.3204(3); Livonia

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No. 14-1023
Jarbo v. Bank of New York Mellon

Props. Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, LLC, 399 F. App’x 97, 102

(6th Cir. 2010). There is no question that the public record shows the mortgage passed from

MERS to BNYM; the assignment was recorded in the Oakland County Register of Deeds on

March 9, 2010. And nothing in the pleadings suggests an irregularity affecting the validity of the

transfer to BNYM. The Jarbos point out that assignment of the mortgage to BNYM occurred

after the cut-off date for including mortgage loans in the trust. But mortgages and mortgage

loans are not the same things, and a cut-off date for including mortgage loans in a trust does not

function as a cut-off date for transfers of mortgages. See Smith v. Litton Loan Servicing, LP, No.

10-14700, 2012 WL 1444636, at *1 (E.D. Mich. Apr. 26, 2012). The Jarbos’ argument

regarding the cut-off date therefore does not raise any sort of irregularity, let alone one that

would affect the validity of the transfer to BNYM.

The Jarbos’ various claims under Mich. Comp. Law § 600.3205a and § 600.3205c fare no

better, as those sections do not apply to the facts of this case. By their terms, both sections apply

only to property claimed as a principal residence exempt from tax under section 7cc of the

general property tax act. Mich. Comp. Laws § 600.3205a (repealed June 19, 2014). The

mortgage to the property, however, explicitly designates the property as a second home, not a

principal residence.

Because the Jarbos’ substantive claims lack merit, there is no basis for granting their

request for an injunction. See Mason & Dixon Lines Inc. v. Steudle, 683 F.3d 289, 296-97 (6th

Cir. 2012). Having thus dispensed with each claim in the Jarbos’ complaint, we affirm the

district court’s judgment dismissing the complaint in its entirety.

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