                 NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                            File Name: 14a0385n.06

                                          No. 13-2100                                 FILED
                                                                                May 22, 2014
                                                                            DEBORAH S. HUNT, Clerk
                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

ABRAHAM ELSHEICK,                               )
                                                )
       Plaintiff-Appellant,                     )
                                                )
v.                                              )
                                                     ON APPEAL FROM THE UNITED
                                                )
                                                     STATES DISTRICT COURT FOR THE
SELECT PORTFOLIO SERVICING, INC.;               )
                                                     EASTERN DISTRICT OF MICHIGAN
PNC BANK, N.A.,                                 )
                                                )
       Defendants-Appellees.                    )
                                                )

       BEFORE: DAUGHTREY, SUTTON, and DONALD, Circuit Judges.

       MARTHA CRAIG DAUGHTREY, Circuit Judge. Since the fall of 2008, millions of

Americans, and tens of thousands of Michiganders, have lost their homes in foreclosure

proceedings due, in large part, to years of questionable banking practices and inadequate

regulation of the banking industry. In yet another of the many cases spawned by the effects of

that home-foreclosure crisis in Michigan, plaintiff Abraham Elsheick seeks to overturn a

decision by the district court that dismissed Elsheick’s complaint against defendants Select

Portfolio Servicing, Inc., and PNC Bank, N.A. In his complaint, Elsheick sought to set aside a

foreclosure-by-advertisement sale of his property in Dearborn Heights, Michigan, that was

initiated by the defendants. On appeal, Elsheick raises a single issue: whether the district court

erred in determining that he “lacked standing to challenge defects in a foreclosure by

advertisement proceeding by holding over ‘after expiration of the redemption period.’” For the

reasons discussed, we conclude that the district court did in fact err by ruling that Elsheick
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Elsheick v. Select Portfolio Servicing, Inc., et al.

lacked standing to bring his claims. However, because Elsheick failed to state a plausible claim

that he was prejudiced by fraud or irregularity in the foreclosure-by-advertisement proceedings,

we cannot excuse his failure to contest that foreclosure during the statutory redemption period.

We thus affirm the judgment of the district court dismissing Elsheick’s complaint.

                        FACTUAL AND PROCEDURAL BACKGROUND


         In January 2006, Abraham Elsheick obtained a $262,400 mortgage from First Franklin

Bank.1       That mortgage was secured by transference to Mortgage Electronic Registration

Systems, Inc., a nominee for First Franklin and the bank’s successors and assigns, of an interest

in a $328,000 home purchased by Elsheick and located at 27130 Doxtator Street in Dearborn

Heights, Michigan. Eventually, the mortgage, serviced by defendant Select Portfolio Servicing,

was assigned directly to National City Bank.


         Unfortunately, Elsheick was unable to make the required mortgage payments in a timely

manner and, “sometime in July 2010,” he contacted the defendants to arrange what Elsheick

hoped would be a “loan modification.” However, the resulting agreement with the bank’s loan

services department was never termed a “loan modification” but, rather, a “Repayment Plan.”

According to the provisions of that plan, Elsheick agreed to make increased monthly mortgage

payments “to bring [the] loan current.” In exchange for that promise, the bank agreed to “allow

[the] loan to remain delinquent during this plan and [to] forbear from starting or continuing a

foreclosure action.” But, if Elsheick then failed to remit payments required by the plan, “[a]ny

foreclosure action [the bank] may have previously initiated will resume.”



         1
           First Franklin Bank was, at the time of the mortgage transaction, a division of National City Bank. As a
result of a subsequent merger, National City Bank became part of PNC Bank, N.A., a wholly owned subsidiary of
defendant PNC Financial Services Group, Inc.

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        By February 2012, Elsheick again had become delinquent in his mortgage payments, and

on February 22, 2012, the defendants initiated foreclosure-by-advertisement proceedings by

publishing notices of a foreclosure sale of the property and by placing a copy of the notice on the

front door of the Doxtator Street dwelling. The actual sale took place one month later, on March

22, 2012, at which time PNC Bank, N.A., purchased the mortgaged property for $305,342.05,

subject to the plaintiff’s right to redeem the property prior to September 22, 2012.


        Elsheick did not redeem the property. Instead, on September 21, 2012, the day prior to

the end of the redemption period, he filed the present lawsuit in Wayne County (Michigan)

Circuit Court. In his complaint, he alleged that: (1) the defendants engaged in fraud and

misrepresentation by stating to him that the repayment plan actually was a loan modification as

envisioned by Michigan statutory provisions; (2) the defendants failed to comply with the

statutory requirements for conducting a foreclosure-by-advertisement; and (3) he was the rightful

owner of the Doxtator property such that the sheriff’s deed issued to National City Bank was

void and should be set aside.


        The defendants removed the action to federal court on diversity grounds and then filed a

motion to dismiss the action because Elsheick no longer had legal title to, or an interest in, the

property that was the subject of the litigation. The district court agreed with the defendants and

dismissed the complaint on standing grounds, leading Elsheick to file this appeal.




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                                            DISCUSSION


Standard of Review


        We review de novo a district court’s grant of a motion to dismiss. Phila. Indem. Ins. Co.

v. Youth Alive, Inc., 732 F.3d 645, 649 (6th Cir. 2013). In doing so, we “‘accept all well-pleaded

factual allegations of the complaint as true and construe the complaint in the light most favorable

to the plaintiff.’” Reilly v. Vadlamudi, 680 F.3d 617, 622 (6th Cir. 2012) (quoting Dubay v.

Wells, 506 F.3d 422, 426 (6th Cir. 2007)). However, the complaint must consist of more than

mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action,”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), and will survive a motion to dismiss only

if it “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is

plausible on its face,’” that is, “that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Twombly, 550 U.S. at 556, 570).


Michigan Foreclosure Procedures


        Foreclosures on Michigan properties may be initiated either through the filing of a

complaint in state circuit court (judicial foreclosures), see M.C.L.A. §§ 600.3101–600.3185; or

by advertisement in accordance with the procedures set forth in M.C.L.A. §§ 600.3201–600.3285

(foreclosures by advertisement). Michigan statutes mandate that foreclosures of mortgages by

advertisement comply with certain prerequisites, most notably that the mortgagor be sent a notice

informing her or him of the right to request a meeting with a housing counselor who can assist

the mortgagor in efforts to obtain a mortgage loan modification.                   See M.C.L.A.

§§ 600.3205a(1)(a)–(k). Should the mortgagor be unsuccessful in securing such a modification,

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however, the mortgage holder or the mortgage servicer “shall work with the borrower” and

“shall use a loan modification program or process” that includes, among other provisions, a

targeted “ratio of the borrower’s housing-related debt to the borrower’s gross income of 38% or

less, on an aggregate basis.” M.C.L.A. § 600.3205c(1)(a). Significantly, if the borrower and the

mortgage holder or mortgage servicer “reach an agreement to modify the mortgage loan, the

mortgage will not be foreclosed if the borrower abides by the terms of the agreement.”

M.C.L.A. § 600.3205a(1)(f).


        Even if a foreclosure sale occurs, the mortgagor is not without recourse. Within the

applicable time limit prescribed by statute—here, six months, see M.C.L.A. § 600.3240(8)—the

mortgagor may cause the purchaser’s deed to become void by remitting “the sum that was bid for

the entire premises sold, with interest from the date of the sale at the interest rate provided for by

the mortgage, together with the amount of the sheriff’s fee paid by the purchaser . . . .”

M.C.L.A. § 600.3240(2). Absent such redemption, however, the sheriff’s deed provided to the

successful purchaser at the foreclosure sale generally “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 . . . .”

M.C.L.A. § 600.3236.


Article III Standing


        In this case, Elsheick failed to redeem the property subject to the foreclosure. Even

though he filed suit in state court seeking to set aside the foreclosure-by-advertisement

proceedings one day short of six months after the sheriff’s sale, such invocation of the

jurisdiction of the state courts did not serve to toll the statutory redemption period. See, e.g.,


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Overton v. Mortg. Elec. Registration Sys., Inc., No. 284950, 2009 WL 1507342, at *1 (Mich. Ct.

App. May 28, 2009) (“Plaintiff’s suit did not toll the redemption period.”). Thus, the defendants

argue, on September 22, 2012, six months from the date of the foreclosure sale, “the mortgagor’s

‘right, title, and interest in and to the property’ [were] extinguished.” Conlin v. Mortg. Elec.

Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir. 2013) (quoting Piotrowski v. State Land

Office Bd., 4 N.W.2d 514, 517 (Mich. 1942)) (citing M.C.L.A. § 600.3236).


        Accepting that argument, the district court concluded that Elsheick’s complaint must be

dismissed because, absent a legal interest in the Doxtator property, Elsheick had no standing to

challenge the foreclosure sale of that property. The decision by the district court relied in large

part upon the wording of M.C.L.A. § 600.3236 and upon the rationale expressed in a number of

Michigan state-court decisions purporting to interpret that statutory provision. See Awad v. Gen.

Motors Acceptance Corp., No. 302692, 2012 WL 1415166, at *4 (Mich. Ct. App. Apr. 24,

2012); Overton, 2009 WL 1507342, at *1; Mission of Love v. Evangelist Hutchinson Ministries,

No. 266219, 2007 WL 1094424, at *5 (Mich. Ct. App. Apr. 12, 2007). However, as recognized

both by other United States district courts in Michigan and by this court, Awad, Overton, and

Mission of Love should not be read as Article III standing cases.


        It is true that the Awad, Overton, and Mission of Love decisions all discuss the plaintiffs’

“standing.” Nevertheless, the rulings in each of those cases ultimately rest upon the fact that the

plaintiffs in those matters were unable to satisfy evidentiary burdens that would allow them to

challenge the foreclosure sales despite the expiration of the statutory redemption period and the

vesting of title in the purchaser of the property. For example, the Awad court recognized that

Michigan law “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
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in the absence of a clear showing of fraud, or irregularity.” 2012 WL 1415166, at *2, (emphasis

added (quoting Schulthies v Barron, 167 N.W.2d 784, 785 (Mich. Ct. App. 1969)) (internal

quotation marks omitted); see also Overton, 2009 WL 1507342, at *1 (same). Likewise, in

Mission of Love, 2007 WL 1094424, at *5, the Michigan Court of Appeals again intimated that

plaintiffs who failed to redeem property in a timely manner still could set aside a foreclosure

sale, but stated that such a claim must contain an assertion of fraud.2


        We also have noted that such cases do not necessarily implicate issues of standing. In El-

Seblani v. IndyMac Mortgage Services, 510 F. App’x 425, 428 (6th Cir. 2013), a case in which

Abdullah El-Seblani sought to challenge a foreclosure sale despite failing to redeem the property

within the applicable six-month period, we stated that “[t]here is no serious dispute that El-

Seblani has Article III standing to contest the foreclosure sale, Friends of the Earth, Inc. v.

Laidlaw Envt’l Servs. (TOC), Inc., 528 U.S. 167, 180–81 . . . (2000) (standing is established

when there is a ‘concrete,’ ‘particularized,’ and ‘actual’ injury that ‘is fairly traceable to the

challenged action of’ the defendants and capable of being ‘redressed by a favorable decision’).”

Indeed, as expressed in Langley v. Chase Home Finance, LLC, No. 1:10-cv-604, 2011 WL

1130926 (W.D. Mich. Mar. 28, 2011):


        Many Defendants suggest the basis for the ruling in Overton is a lack of
        Plaintiff’s standing once the redemption period expires, but the Court of Appeals
        does not actually say this. Nor would it seem like Article III standing could
        possibly be in doubt. After all, the Plaintiffs in such cases are the last lawful
        owner and possessor of the property. Moreover, they often remain in continuing
        possession of the property notwithstanding any Sheriff’s sale and expiration of a
        redemption period. Moreover, Plaintiffs in such cases claim a continuing right to
        lawful ownership and possession based on defects in the process used by
        Defendants to divest them of those rights. This certainly seems to satisfy the
        basic Article III requirement of “injury in fact,” as well as any prudential

        2
         Such fraud, however, must relate to the foreclosure proceedings themselves.   “Any fraud in the
inducement of the warranty deed was no longer relevant.” Id.

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        considerations tied to a “zone of interests” analysis. Indeed, it is hard to imagine
        a person with a better claim to standing to challenge the process at issue.
Id. at *2 n.2; see also Lamie v. Fed. Home Loan Mortg. Corp., No. 1:11-cv-156, 2012 WL

1835243, at *3 (W.D. Mich. May 21, 2012).


        Not only did Elsheick establish Article III standing in this case, he also established his

standing under Michigan law, which requires only that a litigant identify “a legal cause of

action.” Lansing Schs. Educ. Ass’n v. Lansing Bd. of Educ., 792 N.W.2d 686, 699 (Mich. 2010).

Because “Michigan courts have long held that a mortgagor may challenge the validity of a

statutory foreclosure either through ‘summary proceedings’ in the Michigan courts pursuant to

Mich. Comp. Laws § 600.5714, or by filing a separate lawsuit,” El-Seblani, 510 F. App’x at 428

(citing Mfrs. Hanover Mortg. Corp. v. Snell, 370 N.W.2d 401, 404 (Mich. Ct. App. 1985)),

Elsheick has state-law, as well as Article III, standing.


Merits of Plaintiff’s Claims


        “Of course, having standing to bring a claim does not mean you have a valid claim on the

merits. That is a different question.” Langley, 2011 WL 1130926, at *2 n.2. In his complaint,

Elsheick advances three causes of action that he asserts should lead to a restoration of his title to

the Doxtator property: (1) a claim of fraud and misrepresentation; (2) a claim of violations of

Michigan’s foreclosure-by-advertisement statutes; and (3) a claim to quiet title and set aside the

sheriff’s sale of his property. However, despite having standing to raise these allegations,

Elsheick has failed to allege sufficient facts to state a claim to relief that would allow a court to

draw a reasonable inference that the defendants are liable for the alleged misconduct.




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        1. Claim of Fraud and Misrepresentation


        “Michigan’s foreclosure-by-advertisement scheme was meant to, at once, impose order

on the foreclosure process while still giving security and finality to purchasers of foreclosed

properties.” Conlin, 714 F.3d at 359 (citations omitted). Thus, after the statutory redemption

period has expired, courts may examine a plaintiff’s effort to set aside the foreclosure sale only

where such a plaintiff has made “a clear showing of fraud, or irregularity” that relates to “the

foreclosure procedure itself.” Id. at 359-60 (quoting Schulthies, 167 N.W.2d at 785; El-Seblani,

510 F. App’x at 429 (citing Freeman v. Wozniak, 617 N.W.2d 46, 49 (Mich. Ct. App. 2000))).

But even the establishment of such fraud or irregularity is not sufficient, in and of itself, to

justify a plaintiff’s rescission of a foreclosure sale:


        [P]roving a defect or irregularity in a foreclosure proceeding “[will] result in a
        foreclosure that is voidable, not void ab initio.” Kim v. JPMorgan Chase Bank,
        N.A., . . . 825 N.W.2d 329, 337 (Mich. 2012) (initial emphasis added).
        Consequently, the [plaintiff] also must establish that prejudice resulted from any
        alleged irregularity to reclaim [his] property. See id. “To demonstrate such
        prejudice, [he] must show that [he] would have been in a better position to
        preserve [his] interest in the property absent [defendants’] noncompliance with
        the statute.” Id.
Rishoi v. Deutsche Bank Nat’l Trust Co., No. 13-1119, 2013 WL 6641237, at *4 (6th Cir. Dec.

17, 2013).


        Elsheick runs into both procedural and substantive stumbling blocks in his effort to set

aside the sale of his property based upon allegations of the defendants’ fraud in misrepresenting

to him that he had entered into a loan modification agreement that would protect his possessory

interest in his home. First, pursuant to the provisions of Federal Rule of Civil Procedure 9(b),

“[i]n alleging fraud or mistake, a party must state with particularity the circumstances

constituting fraud or mistake.” “We have . . . interpreted Rule 9(b) to require that a plaintiff

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‘allege the time, place, and content of the alleged misrepresentations on which he or she relied;

the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the

fraud.’” Sanderson v. HCA–The Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006) (emphasis

added) (citations omitted). Stated differently, “[a]t a minimum, Rule 9(b) requires that a plaintiff

set forth the ‘who, what, when, where, and how’ of the alleged fraud.” United States ex rel.

Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (citation

omitted).


        Elsheick has failed to satisfy this heightened pleading requirement.            Instead, his

complaint stated broadly “[t]hat the Defendants intentionally or unintentionally[,] without regard

for the truth of the matter[,] misrepresent[ed] to the Plaintiff that he had been approved for a loan

modification as that term is defined in MCL 600.3205c.” Such an allegation does not identify

the exact speaker, the precise statement made, or the date when and the place where the

statement was uttered. Thus, Elsheick’s allegations of fraudulent misrepresentation fall far short

of the specificity required by Rule 9(b).


        Even if Elsheick’s allegations of fraud had been detailed sufficiently in his complaint,

however, he could not have prevailed on the merits of his cause of action because his filing failed

to raise a plausible claim for relief.             Under established Michigan law, fraudulent

misrepresentation requires proof of the following:


        (1) That defendant made a material representation; (2) that it was false; (3) that
        when he made it he knew that it was false, or made it recklessly, without any
        knowledge of its truth and as a positive assertion; (4) that he made it with the
        intention that it should be acted upon by plaintiff; (5) that plaintiff acted in
        reliance upon it; and (6) that he thereby suffered injury. Each of these facts must
        be proved with a reasonable degree of certainty, and all of them must be found to
        exist; the absence of any one of them is fatal to a recovery.


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Titan Ins. Co. v. Hyten, 817 N.W.2d 562, 567-68 (Mich. 2012) (citations and footnote omitted).


        In his complaint, Elsheick contends that the defendants misrepresented to him that he had

been approved for a loan modification. In fact, however, the “agreements” between the parties

called merely for forbearance of delinquent mortgage payments. It is inconceivable that a

reasonable plaintiff could have been misled by the documents offered by the defendants. First,

those “agreements” clearly were labeled “Repayment Plan for Loan Number 1044628134” and

“Repayment Plan for Loan Number 1044628135” and never mentioned the term “loan

modification.”    Second, the repayment plans specified the amount of each of the monthly

payments (ranging from $2,105.24 to $2,944.57) that were required to bring the mortgage back

into non-delinquent status.      Even Elsheick himself recognized in his complaint that the

agreements with the defendants thus called for monthly payments in excess of his prior monthly

obligation of $2,076.00 under his original mortgage—hardly evidence of the type of “loan

modification” envisioned by the Michigan statutes enacted to provide relief to struggling

homeowners. Under such circumstances, Elsheick failed to advance a plausible claim that he

had been led to believe the repayment plan was actually a loan-modification agreement that

would allow him to remit lower monthly mortgage payments.


        2. Claim of Violation of Michigan’s Foreclosure-by-Advertisement Statutes


        Elsheick next asserts that the defendants failed to provide him with the notice of

foreclosure mandated by the provisions of M.C.L.A. § 600.3205a and, consequently, that they

improperly initiated the foreclosure-by-advertisement proceedings without exploring the

feasibility of entering into a M.C.L.A. § 600.3205c loan modification agreement. To remedy the




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alleged error, Elsheick requests that we set aside the completed foreclosure-by-advertisement

proceedings and order the defendants to start anew with an offer of a loan modification.


        However, the relief Elsheick seeks is not available to remedy the violation he alleged.

Subsection (8) of M.C.L.A. § 600.3205c identifies the exclusive remedy for a defendant’s failure

to comply with the loan-modification process outlined in the Michigan statutes. That subsection

provides, “If a mortgage holder or mortgage servicer begins foreclosure proceedings under this

chapter in violation of this section, the borrower may file an action in the circuit court for the

county where the mortgaged property is situated to convert the foreclosure proceeding to a

judicial foreclosure.” M.C.L.A. § 600.3205c(8) (emphasis added). Elsheick did not utilize that

exclusive remedy available to him. Thus, any prejudice he suffered was attributable to his own

failure to seek the relief once available to him, not to the defendants’ actions or inactions. See,

e.g., Smith v. Bank of Am. Corp., 485 F. App’x 749, 756 (6th Cir. 2012) (M.C.L.A. § 600.3205c

“allows plaintiffs to enjoin a foreclosure by advertisement and convert it to a judicial

foreclosure[;] they brought this action after the foreclosure sale occurred, and so there is no

foreclosure to enjoin or convert”); see also Kim, 825 N.W.2d at 337 (showing of prejudice

required to set aside foreclosure sale).


        As a holdover mortgagor, Elsheick possessed the standing necessary to challenge the

alleged failure of the defendants to comply with the requirements of Michigan’s foreclosure-by-

advertisement statutes.    His failure to avail himself of the exclusive avenue for doing so,

however, means that he cannot state a plausible claim to relief on this issue. The district court

thus properly dismissed this second cause of action as well.




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        3. Claim to Quiet Title


        Finally, Elsheick also failed to advance a plausible quiet-title claim.       In Michigan,

plaintiffs in quiet-title actions “have the burden of proof and must make out a prima facie case of

title.” Boekeloo v. Kuschinski, 324 N.W.2d 104, 108 (Mich. Ct. App. 1982) (emphasis added)

(citations omitted). Elsheick cannot do so in this matter. Once the statutory redemption period

lapsed without Elsheick redeeming the Doxtator property, all title to that realty vested in the

foreclosure-sale purchaser. See M.C.L.A. § 600.3236. Moreover, to the extent that Elsheick’s

effort to quiet title is intertwined with his allegation that the defendants fraudulently

misrepresented the nature of the forbearance agreements he signed, he remains without hope of

recovery on this claim. Because he failed to make “a clear showing of fraud, or irregularity” in

the foreclosure proceedings, or even to plead fraud with sufficient particularity, see Fed. R. Civ.

P. 9(b), no equitable extension of the redemption period was possible, and Elsheick was left

without any legal claim to the property on which to base his quiet-title cause of action. See

Smith, 485 F. App’x at 754.


                                           CONCLUSION
        Although the district court erred in analyzing this matter as a standing case, Elsheick

failed to state a claim for relief that is plausible on its face ‒ by failing to satisfy the relevant

pleading requirements, by not availing himself of the exclusive remedy provided by statute, and

by failing to point to prejudice suffered as a result of any action or inaction on the part of the

defendants. We thus AFFIRM the judgment of the district court, although on grounds different

from those expressed in the district court’s opinion and order.




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