Buyers' claim against bank with "equitable mortgage" is dismissed
Darwyn Fair and his partner sued US Bank National Association and others, arguing that they had illegally foreclosed on the plaintiffs' property. The La Salle Bank had been granted an equitable mortgage on the property, which US Bank then purchased at a foreclosure sale. The Plaintiffs argued that the latter sale was illegal and raised the issue of "robo-signing" practices alleged by Michigan's Attorney General against the banks involved. The Plaintiffs sued to block the transfer of the property, but they did not serve the bank in accordance with the Michigan Court Rules. Instead of serving an officer or director, they sent the Complaint to the Bank's headquarters by registered mail. While the mail was making its way through the corporate hierarchy, the time for answer expired and the plaintiffs defaulted the bank. The Bank then successfully set aside the Default and the plaintiffs appealed.
The Court of Appeals upheld the lower court's decisions setting aside the default and refusing the Plaintiffs' request to amend their complaint. The court held that "actual notice" to the bank was irrelevant where the Plaintiffs did not serve the corporation in accordance with the applicable court rule. It also held that generic allusions to "robo-signing" were insufficient to create a question of fact regarding the propriety of a mortgage, particularly where, as in the instant case, the mortgage was instituted through a judical proceeding and not as the result of routine paperwork.