Fed. Home Loan Mortg. Corp. v. Werme

Decision Date21 January 2021
Docket NumberNo. 350981,350981
Citation335 Mich.App. 461,966 N.W.2d 729
Parties FEDERAL HOME LOAN MORTGAGE CORPORATION, Plaintiff/Counterdefendant-Appellee, v. Lesa WERME, also known as Lesa J. Werme, Defendant/Counterplaintiff-Appellant.
CourtCourt of Appeal of Michigan — District of US

Orlans PC, Troy (by Melissa Z. Prantzalos and Regina M. Slowey ) for plaintiff.

Steven A. Finegood, Southfield, for defendant.

Before: Redford, P.J., and Markey and Boonstra, JJ.

Redford, P.J. Defendant/counterplaintiff-appellant, Lesa Werme, appeals the circuit court's grant of summary disposition and dismissal of her counterclaims against plaintiff/counterdefendant-appellee, Federal Home Loan Mortgage Corporation (Freddie Mac). For the reasons set forth in this opinion, we affirm the circuit court's grant of summary disposition in favor of Freddie Mac, but remand for entry of an order declaring that Freddie Mac's ownership and possession of the real property resulted in the extinguishment of the mortgage-loan debt under the promissory note that it holds associated with the discharged senior mortgage because equity will not permit Freddie Mac a double recovery.


Werme owned property in Saugatuck, Michigan, and during 2004, she granted two mortgages on the property to secure two loans. First, she obtained a $330,400 mortgage loan from NovaStar Home Mortgage, Inc., and granted its nominee, Mortgage Electronic Registration Systems, Inc. (MERS), a mortgage on the property to secure the loan. A little over one month later, Werme obtained a $46,000 personal line of credit secured by a second mortgage on the property that she granted to Huntington National Bank (HNB). Werme later obtained an increase in the HNB loan and agreed to a modification of the HNB mortgage. During 2008, Freddie Mac acquired ownership of the promissory note secured by the senior mortgage on the property. Mortgage Center, LLC, serviced that loan for Freddie Mac. Werme defaulted during 2014 on both loans.

In January 2015, MERS assigned the senior mortgage to Mortgage Center, which initiated foreclosure proceedings. Werme sued Mortgage Center and Freddie Mac in the United States District Court for the Western District of Michigan for declaratory and injunctive relief to prevent the foreclosure and for an accounting and damages for alleged unjust enrichment. HNB later foreclosed its mortgage by advertisement, and on November 5, 2015, HNB purchased the property at the sheriff's sale for a full-credit bid of $96,000. HNB recorded its Sheriff's Deed on Mortgage Sale on November 12, 2015, in the Allegan County Register of Deeds. The sheriff's deed specified May 6, 2016, as the last day to redeem the subject property. Werme failed to redeem the property. Instead, on May 6, 2016, she sued HNB in the same federal court in which she sued Mortgage Center and Freddie Mac to challenge the validity of the foreclosure sale. The federal court dismissed Werme's lawsuit against HNB on September 2, 2016, with prejudice, for failure to state a claim because she could not establish fraud, irregularity, or prejudice related to HNB's foreclosure.

On July 6, 2017, Freddie Mac purchased the sheriff's deed from HNB, and HNB conveyed the property to Freddie Mac by quitclaim deed. On April 5, 2018, Freddie Mac filed in the 57th District Court a summary proceeding for possession of the property. Werme removed the action to federal court and filed a counterclaim. Freddie Mac moved to remand the case to state court; the federal court granted the motion, remanded to the state district court, and closed the case. On remand from the federal court, Werme moved to transfer the case to Allegan Circuit Court on ground that she had filed a counterclaim for declaratory and injunctive relief because Freddie Mac had no right to possess the property or evict her from the premises. The district court ordered the removal of Werme's counterclaim to the circuit court on December 20, 2018, but retained the summary proceeding. Werme filed an amended counterclaim in the circuit court in which she admitted facts related to HNB's foreclosure and that Freddie Mac purchased the property from HNB. She alleged two counts, one for declaratory and injunctive relief and the other for determination of the rights to the property. Werme claimed that she held fee-simple title to the property and that Freddie Mac neither owned nor had a right to possess it.

Meanwhile, Freddie Mac moved for judgment of possession in the district court; the court granted the motion, entered a judgment of possession, and ordered Werme to vacate the premises. Freddie Mac next moved for summary disposition in the circuit court, and that court granted the motion. Werme now appeals.


We review de novo questions of law, actions to quiet title in equity, as well as decisions to grant or deny summary disposition. Trademark Props. of Mich., L.L.C. v. Fed. Nat'l Mtg. Ass'n , 308 Mich. App. 132, 138, 863 N.W.2d 344 (2014). This Court reviews de novo the grant or denial of summary disposition to determine if the moving party was entitled to judgment as a matter of law. Maiden v. Rozwood , 461 Mich. 109, 118, 597 N.W.2d 817 (1999). In Maiden , our Supreme Court explained:

A party may support a motion under MCR 2.116(C)(7) by affidavits, depositions, admissions, or other documentary evidence. If such material is submitted, it must be considered. MCR 2.116(G)(5). Moreover, the substance or content of the supporting proofs must be admissible in evidence.... Unlike a motion under subsection (C)(10), a movant under MCR 2.116(C)(7) is not required to file supportive material, and the opposing party need not reply with supportive material. The contents of the complaint are accepted as true unless contradicted by documentation submitted by the movant.
* * *
A motion under MCR 2.116(C)(8) tests the legal sufficiency of the complaint. All well-pleaded factual allegations are accepted as true and construed in a light most favorable to the nonmovant. A motion under MCR 2.116(C)(8) may be granted only where the claims alleged are so clearly unenforceable as a matter of law that no factual development could possibly justify recovery. When deciding a motion brought under this section, a court considers only the pleadings.
A motion under MCR 2.116(C)(10) tests the factual sufficiency of the complaint. In evaluating a motion for summary disposition brought under this subsection, a trial court considers affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties ... in the light most favorable to the party opposing the motion. Where the proffered evidence fails to establish a genuine issue regarding any material fact, the moving party is entitled to judgment as a matter of law. [ Id . at 119-120, 597 N.W.2d 817 (quotation marks and some citations omitted).]

Summary disposition is appropriate under MCR 2.116(C)(10) if no genuine issue of any material fact exists and the moving party is entitled to judgment as a matter of law. West v. Gen. Motors Corp. , 469 Mich. 177, 183, 665 N.W.2d 468 (2003). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." Id.

This Court also reviews de novo a decision to grant or deny a declaratory judgment, and it reviews for clear error the trial court's factual findings regarding that decision. Ter Beek v. City of Wyoming , 297 Mich. App. 446, 452, 823 N.W.2d 864 (2012), aff'd 495 Mich. 1, 846 N.W.2d 531 (2014). Clear error occurs "when this Court is left with a definite and firm conviction that a mistake has been made." Hardrick v. Auto Club Ins. Ass'n , 294 Mich. App. 651, 660, 819 N.W.2d 28 (2011) (quotation marks and citation omitted).


Werme argues that the circuit court erred by granting Freddie Mac summary disposition of her claims for declaratory judgment and for a determination of rights in the property because, she asserts, Freddie Mac must foreclose the discharged first mortgage and until it does, she continues to hold fee-simple title to the property and has the right to possess it. We disagree.

Under MCR 2.605(A)(1), a court "may declare the rights and other legal relations of an interested party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." In a declaratory action, the plaintiff generally has the burden to prove each fact alleged. Shavers v. Attorney General , 402 Mich. 554, 589, 267 N.W.2d 72 (1978). Under MCL 600.2932, a person may seek to quiet title to real property by bringing an action in circuit court. MCL 600.2932 provides, in relevant part:

(1) Any person, whether he is in possession of the land in question or not, who claims any right in, title to, equitable title to, interest in, or right to possession of land, may bring an action in the circuit courts against any other person who claims or might claim any interest inconsistent with the interest claimed by the plaintiff, whether the defendant is in possession of the land or not.
(2) No action may be maintained under subsection (1) by a mortgagee, his assigns, or representatives for recovery of the mortgaged premises, until the title to the mortgaged premises has become absolute, or by a person for the recovery of possession of premises, which were sold on land contracted, to whom relief is available under subdivision (1) of section 5634.
(3) If the plaintiff established his title to the lands, the defendant shall be ordered to release to the plaintiff all claims thereto. In an appropriate case the court may issue a writ of possession or restitution to the sheriff or other proper officer of any county in this state in which the premises recovered are situated.
* * * (5) Actions under this section are equitable in nature.

"[T]he plaintiff in a quiet-title action has the initial...

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