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Media Alerts - Burniac v. Wells Fargo Bank -- Sixth Circuit
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January 28, 2016
  Burniac v. Wells Fargo Bank -- Sixth Circuit
Case name: Donald Burniac v. Wells Fargo Bank, N.A.

Headline: State-Court Injunctions May Not Withstand Removal.

Area of law: foreclosures; enjoinment; assignment of mortgage

Issue(s) presented: May a federal district court issue summary judgment after a state court has issued an injunction? Will an invalid assignment void foreclosure proceedings?

Brief summary: Due to unpaid monthly mortgage payments, a homeowner's home became subject to foreclosure. The homeowner sued Wells Fargo Bank in state court to prevent the foreclosure sale. His complaint alleged, in part, that the assignment of his mortgage from Washington Mutual Bank to Wells Fargo was invalid. The state court purportedly entered a default judgment against Wells Fargo and preliminarily enjoined the foreclosure sale. Wells Fargo removed the case to the federal district court, which later denied the homeowner's motion to remand and granted Wells Fargo's motion for summary judgment. The homeowner appealed, arguing that the district court committed procedural errors and misapplied state substantive law. The Sixth Circuit affirmed, finding no procedural errors or misapplication of state law.

Extended summary: A homeowner and his wife executed a mortgage to secure a loan from Washington Mutual Bank. Wells Fargo Bank acted as servicer of the mortgage and sent the homeowner his monthly mortgage statements. Washington Mutual eventually assigned ownership of homeowner's mortgage to Wells Fargo, although the homeowner disputed the validity of that assignment. After the assignment, the homeowner continued to receive his monthly mortgage statements from Wells Fargo. He sent his mortgage payments to Wells Fargo for several years, until he experienced hardship and stopped making payments. Wells Fargo began foreclosure proceedings on his property, and a foreclosure sale was scheduled.

To prevent the foreclosure sale, the homeowner sued Wells Fargo in state court. The homeowner's complaint asserted, among other claims, that the signatures on the assignment were forged by "robo-signers" or that the signers had no authority to execute the assignment. The next day, the homeowner sought a temporary restraining order, which the state court granted immediately. The state court also set a hearing on the homeowner's request for a preliminary injunction. The parties stipulated to adjourn the hearing, but Wells Fargo did not attend the rescheduled hearing. The state court issued a preliminary injunction in the homeowner's favor.

Later, the homeowner filed a "DEFAULT REQUEST, AFFIDAVIT, AND ENTRY" form asking the court clerk to enter a default against Wells Fargo for its "failure to plead or otherwise defend" the case. Beneath that text were two lines with "Date" and "Court Clerk" captions that were left blank. The state-court docket displayed no other entries concerning a default judgment. Wells Fargo removed the case to federal court on the same day that the homeowner requested the default judgment. No default was ever entered.

The homeowner moved in federal court to remand the case back to state court, but the district court concluded that subject-matter jurisdiction was proper based on diversity of citizenship and denied the motion. The district court later granted Wells Fargo's motion for summary judgment. The homeowner appealed, challenging: (1) procedural errors allegedly committed by the district court, and (2) the district court's substantive-law rulings on summary judgment.

The Sixth Circuit rejected the homeowner's procedural challenges because a default judgment was never entered against Wells Fargo, and the state court's preliminary injunction neither prevented the district court from issuing a summary-judgment order nor required remand of the case to the state court. The Sixth Circuit added that a final order on the merits extinguishes a preliminary injunction.

Likewise, the court held that the homeowner's challenges based on the district court's application of Michigan law failed because, even assuming that Wells Fargo violated Michigan law by way of an invalid assignment, the homeowner had not demonstrated that he was prejudiced by those violations. Specifically, the homeowner could not demonstrate that the alleged assignment irregularities (1) would subject him to double liability, (2) placed him in a worse position to keep his property, or (3) prejudiced him in any other way. Indeed, the purported assignment deficiencies did not cause the homeowner confusion about whom he should pay because, both before and after the assignment, the homeowner received his monthly mortgage statements from the same bank: Wells Fargo. Therefore, the Sixth Circuit affirmed the district court's decision.

Panel: Circuit Judges Richard Moore, Eric Clay, and Ronald Gilman.

Date of issued opinion: January 13, 2016

Docket number: 15-1230

Decided: Affirmed.

Counsel: ARGUED: Carson J. Tucker, THE LAW OFFICES OF CARSON J. TUCKER, Ann Arbor, Michigan, for Appellant. Jeffrey C. Gerish, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellees. ON BRIEF: Carson J. Tucker, THE LAW OFFICES OF CARSON J. TUCKER, Ann Arbor, Michigan, for Appellant. Jeffrey C. Gerish, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellees.

Author of opinion: Ronald Lee Gilman, Circuit Judge

Case alert author: Luciana Viramontes

Case alert circuit supervisor: Professor Mark Cooney

Link to the case:

    Posted By: Mark Cooney @ 01/28/2016 03:52 PM     6th Circuit  

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