FAROUK SACO and SUHA SACO v. Deutsche Bank National Trust Company

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0923n.06
Case No. 14-1823
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FAROUK SACO and SUHA SACO,
Plaintiffs-Appellants,
v.
DEUTSCHE BANK NATIONAL TRUST
COMPANY,
Defendant-Appellee.
)
)
)
)
)
)
)
)
)
)
)
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF
MICHIGAN
BEFORE: BATCHELDER, SUTTON, and COOK, Circuit Judges.
SUTTON, Circuit Judge. Farouk and Suha Saco mortgaged their Michigan home to
obtain a loan. When they could no longer keep up with their payments, their bank foreclosed on
the house. A federal district court refused to invalidate the sheriff’s sale that ensued. Neither
will we.
In 2004, the Sacos took out a $255,000 loan and secured it with a mortgage on their
house. The Sacos defaulted nine years later, prompting Deutsche Bank—which by then had
been assigned the mortgage—to foreclose on the house. As required by Michigan law, the Bank
told the Sacos that a sheriff’s sale was imminent, and it won the property at the resulting auction
with a bid of $156,141.61. Once that happened, the Sacos had six months to “redeem” their

-- 1 of 3 --

Case No. 14-1823
Saco v. Deutsche Bank Nat’l Trust Co.
2
property by buying it back from its new owner at the new sales price. Mich. Comp. Laws
§ 600.3240(1), (7). They did not try to redeem the property. Instead, after the redemption period
ended, the Sacos sued the Bank in Grand Traverse County, claiming that the sheriff’s sale was
invalid. The Bank removed their lawsuit to federal court, which dismissed the complaint for
failure to state a claim. The Sacos appeal.
The appeal turns on whether the Bank properly obtained ownership of the house through
the sheriff’s sale. One statute and two facts demonstrate that the Bank permissibly owns the
house. In Michigan, a valid sheriff’s sale gives “all the right, title, and interest” in a property to
whoever wins the auction, unless the original owner redeems the property within six months. Id.
§ 600.3236. The Bank won the auction, and the Sacos never exercised their right of redemption.
See R. 11-3 at 2, PageID #100; R. 19 at 2.
The Sacos cannot head off this conclusion by claiming that the Bank’s alleged violations
of the Michigan loan-modification statute made the sheriff’s sale invalid. For one, Michigan has
repealed the statute. An Act To Amend 1961 PA 236, 2012 Mich. Legis. Serv. 521 (West). For
another, they cannot prevail even if we assume their allegations are true and even if we assume
the statute still bears on the issue. In Michigan, courts cannot set aside a completed sheriff’s sale
without “a clear showing of fraud” or “irregularity.” Conlin v. Mortg. Elec. Registration Sys.
Inc., 714 F.3d 355, 359 (6th Cir. 2013). The Sacos mention this standard but make no attempt to
meet it with the specificity Federal Rule of Civil Procedure 9(b) requires. See Appellants’ Br. at
8.
More, the Sacos misunderstand how the (repealed) loan-modification statute worked. It
created a limited and exclusive remedy for violations: judicial supervision of a pending
foreclosure proceeding. Mich. Comp. Laws § 600.3205c(8). The sheriff’s sale, however, has

-- 2 of 3 --

Case No. 14-1823
Saco v. Deutsche Bank Nat’l Trust Co.
3
come and gone. That leaves the courts with no foreclosure to supervise and the Sacos with no
claim to bring, as we have said before in similar circumstances. E.g., Holliday v. Wells Fargo
Bank, NA, 569 F. App’x 366, 370 (6th Cir. 2014); Elsheick v. Select Portfolio Servicing, Inc.,
566 F. App’x 492, 499 (6th Cir. 2014).
It is true that, in one instance, we said that violations of the statute are “structural defects”
that automatically void a foreclosure. See Mitan v. Fed. Home Loan Mortg. Corp., 703 F.3d 949,
952 (6th Cir. 2012). But that was when Michigan law permitted that conclusion. That is no
longer the case. The Michigan Supreme Court has since made clear that defective foreclosures
are voidable, not void from the outset, and voidable only if the claimants (here the Sacos) can
show they were prejudiced by the defect. Kim v. JPMorgan Chase Bank, N.A., 825 N.W.2d 329,
337 (Mich. 2012). Any such violation thus does not void the foreclosure from the outset. And
the Sacos at any rate have not alleged that “they would have been in a better position to preserve
their interest in the property” had the Bank complied with the statute. Id. They may not proceed
to discovery on speculation alone. See New Albany Tractor, Inc. v. Louisville Tractor, Inc.,
650 F.3d 1046, 1051 (6th Cir. 2011).
That leaves one other question—their action to quiet title under Mich. Comp. Laws
§ 600.2932(1). Michigan Court Rule 3.411(B)(2)(c) explains that, to invoke that statute, the
Sacos must plead “facts establishing the superiority of the[ir] . . . claim” to the property—
showing, in other words, that the sheriff’s sale was somehow invalid. But their only arguments
on this score involve the Bank’s alleged violations of the loan-modification statute. Those
allegations, we have just explained, do not take the Sacos where they need to go.
For these reasons, we affirm.

-- 3 of 3 --