                            STATE OF MICHIGAN

                            COURT OF APPEALS


STEPHEN HAGERMAN and                                                UNPUBLISHED
ELISABETH HAGERMAN,                                                 February 17, 2015

               Plaintiffs-Appellants,

v                                                                   No. 319271
                                                                    Oakland Circuit Court
NATIONSTAR MORTGAGE, L.L.C., and                                    LC No. 2013-131729-CH
CITIBANK, N.A.,

               Defendants-Appellees,

and

FEDERAL DEPOSIT INSURANCE
CORPORATION,

               Defendant.


Before: FORT HOOD, P.J., and JANSEN and GADOLA, JJ.

PER CURIAM.

        Plaintiffs, Stephen Hagerman and Elisabeth Hagerman, appeal as of right an opinion and
order granting summary disposition to defendants, Nationstar Mortgage, L.L.C. and Citibank
N.A., in this action to quiet title. We affirm.

       In 2006, plaintiffs entered into a mortgage with Citizens First Mortgage for real property
located in West Bloomfield, Michigan. The loan was modified in January 2009. In 2010, the
State of Michigan closed CF Bancorp, which was the parent company of Citizens First
Mortgage. The Federal Deposit Insurance Corporation (FDIC) was named the receiver. The
FDIC assigned plaintiffs’ mortgage to defendant Citibank, and the assignment was recorded. In
2012, plaintiffs defaulted on the mortgage, and in August 2012, defendant Nationstar Mortgage
(the presumed servicer of the loan), provided plaintiffs with a foreclosure notice pursuant to
MCL 600.3205a, signaling an intent to foreclose by advertisement. Plaintiffs attempted to
negotiate a modification but were denied. Defendants proceeded with publishing a notice of
foreclosure for four consecutive weeks, beginning December 12, 2012.

        On January 18, 2013, plaintiffs filed an action to quiet title against defendants, alleging
that the assignment of the mortgage to defendants was invalid and, thus, plaintiffs had superior

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title over defendants.1 Defendants filed a motion for summary disposition asserting that (1) the
assignment was validly recorded, and a mortgagee of record is entitled to foreclose, (2) plaintiffs
did not have standing to challenge the assignment because they were not parties to the
assignment, (3) the quiet title action lacked merit because plaintiffs did not have superior title,
and (4) plaintiffs had unclean hands. The trial court granted defendants’ motion in full, and
plaintiffs now appeal.

       Plaintiffs argue that the trial court erred in finding that plaintiffs lacked standing to
challenge the assignment of the mortgage. We disagree.

        A grant or denial of summary disposition based upon a failure to state a claim is reviewed
de novo on appeal. Bailey v Schaaf, 494 Mich 595, 603; 835 NW2d 413 (2013). A motion
under MCR 2.116(C)(8) “tests the legal sufficiency of the pleadings alone.” Nuculovic v Hill,
287 Mich App 58, 61; 783 NW2d 124 (2010). A motion for summary disposition pursuant to
MCR 2.116(C)(10) tests the factual sufficiency of the complaint. Corley v Detroit Bd of Ed, 470
Mich 274, 278; 681 NW2d 342 (2004). This Court reviews a “motion brought under MCR
2.116(C)(10) by considering the pleadings, admissions, and other evidence submitted by the
parties in the light most favorable to the nonmoving party.” Latham v Barton Malow Co, 480
Mich 105, 111; 746 NW2d 868 (2008).

        Plaintiffs lack standing to challenge the assignment of the mortgage. The long-settled
rule in Michigan is that a person who is not a party to an assignment lacks standing to challenge
it. Bowles v Oakman, 246 Mich 674, 678; 225 NW 613 (1929). In Bowles, the Michigan
Supreme Court held that a promissor could not challenge obligations under a promissory note by
asserting that an invalid assignment had occurred. “The maker of a promissory note cannot, in
an action brought against him by the indorsee or transferee thereof, litigate questions that can
properly arise only between the holder and his immediate indorser.” Id. at 679 (citation omitted).
See also Warth v Seldin, 422 US 490, 499; 95 S Ct 2197; 45 L Ed 2d 343 (1975) (stating that
“the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to
relief on the legal rights or interests of third parties.”). In Bowles, the Court explained that
challenges to the assignment by the nonparty plaintiff were limited to those which might give
rise to double obligation on the debt. “A maker, when sued on such instrument, may defend on
the ground that the plaintiff is not the owner of the instrument, does not have legal title to it, for
the reason that the maker has a right to insist that he pay his obligation but once, and hence to the
true owner.” Bowles, 246 Mich at 677-678.

       Federal courts have also analyzed this issue as it applies to Michigan law. In Livonia
Props Holdings, LLC v 12840-12976 Farmington Rd Holdings, LLC, 399 F Appx 97, 102-103
(CA 6, 2010), the United States Court of Appeals for the Sixth Circuit affirmed the district court
and held that the plaintiff mortgagor lacked standing to challenge an underlying assignment of
the mortgage.




1
    There were other counts included in plaintiffs’ complaint, which are not challenged on appeal.


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       [E]ven if there was a flaw in the assignment, [the plaintiff] does not have standing
       to raise that flaw to challenge [the defendant’s] chain of title. As recognized by
       the district court, there is ample authority to support the proposition that “a
       litigant who is not a party to an assignment lacks standing to challenge that
       assignment.” [Livonia Props Holdings, LLC v 12840-12976 Farmington Rd
       Holdings, LLC, 717 F Supp 2d 724, 736-737 (ED Mich, 2010).] An obligor “may
       assert as a defense any matter which renders the assignment absolutely invalid or
       ineffective, or void.” 6A CJS Assignments § 132 (2010). These defenses include
       nonassignability of the instrument, assignee’s lack of title, and a prior revocation
       of the assignment, none of which are available in the current matter. Id. Obligors
       have standing to raise these claims because they cannot otherwise protect
       themselves from having to pay the same debt twice. Id. [Livonia Props, 399 F
       Appx at 102.]

         Here, plaintiffs admit they defaulted under the mortgage by failing to make their required
payments, which triggered defendants’ right to foreclosure. Thus, plaintiffs have no defenses to
payment or foreclosure under the loan documents. By arguing only that the assignment of
mortgage was invalid, plaintiffs seek to assert the rights of third parties, where there is no
evidence that those parties object to the assignment. Furthermore, there is no evidence that
plaintiffs’ concerns about the assignment relate to the need to protect themselves from double
liability. Thus, plaintiffs lack standing to challenge the underlying assignment.

        We further reject plaintiffs’ reliance on Lansing Sch Ed Ass’n v Lansing Bd of Ed, 487
Mich 349; 792 NW2d 686 (2010). Plaintiffs assert that a holding that plaintiffs lacked standing
to challenge the assignment of the mortgage “is a clear contradiction to Michigan’s standing
doctrine.” We disagree. In Lansing Sch Ed Ass’n, the Court stated:

       We hold that Michigan standing jurisprudence should be restored to a limited,
       prudential doctrine that is consistent with Michigan’s long-standing historical
       approach to standing. Under this approach, a litigant has standing whenever there
       is a legal cause of action. . . . Where a cause of action is not provided at law, then
       a court should, in its discretion, determine whether a litigant has standing. A
       litigant may have standing in this context if the litigant has a special injury or
       right, or substantial interest, that will be detrimentally affected in a manner
       different from the citizenry at large or if the statutory scheme implies that the
       Legislature intended to confer standing on the litigant. [Id. at 372.]

Plaintiffs assert that they have general standing to bring an action to quiet title pursuant to MCL
600.2932. However, while plaintiffs may be able to bring a quiet title action pursuant to MCL
600.2932, the statute does not speak to the specific nature of the challenge brought by plaintiffs
in this case—the invalidity of the underlying assignment. Further, plaintiffs lack a substantial
interest that may be detrimentally affected by the assignment. While the assignment generally
relates to their property, there is no question that the mortgagee, whoever that may be, had the
right to seek foreclosure based on plaintiffs’ default and failure to cure. Plaintiffs were not in
further danger of losing their home because of the assignment. Thus, plaintiffs’ argument fails.

       Even assuming plaintiffs had standing to challenge the assignment of the mortgage, we

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further hold that summary disposition was appropriate on the merits of plaintiffs’ claim to quiet
title. In a quiet title action, the plaintiff has the initial burden of proof to establish that they have
title to the land. Beulah Hoagland Appleton Qualified Personal Residence Trust v Emmet Co Rd
Comm, 236 Mich App 546, 550; 600 NW2d 698 (1999). It is then up to the defendant to prove
that their title is superior to that of plaintiffs. Id. Here, it is clear that defendants have superior
title to the property, evidenced by the assignment recorded in the Oakland County Register of
Deeds. Pursuant to MCL 600.3204(3), defendants are able to foreclose because there is a record
chain of title evidencing the assignment of the mortgage. Plaintiffs offer no evidence or even
argument to challenge the recorded assignment. Plaintiffs, on the other hand, are in default on
the mortgage. Therefore, defendants hold superior title over plaintiffs.

        Based on our stated disposition, it is unnecessary to address plaintiffs’ final issue relating
to unclean hands.

        Affirmed. Defendants, the prevailing parties, may tax costs. MCR 7.219.

                                                                /s/ Karen M. Fort Hood
                                                                /s/ Kathleen Jansen
                                                                /s/ Michael F. Gadola




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