Case: Document: 22-2 Filed: 07/15/2015 Page: 1 NOT RECOMMENDED FOR FULL-TEXT PUBLICATION. No

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1 Case: Document: 22-2 Filed: 07/15/2015 Page: 1 NOT RECOMMENDED FOR FULL-TEXT PUBLICATION UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT ELLEN MARGELIS, Plaintiff-Appellant, v. INDYMAC BANK FSB, et al., Defendants-Appellees. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN O R D E R Before: SUHRHEINRICH, ROGERS, and GRIFFIN, Circuit Judges. Ellen Margelis, a Michigan resident proceeding pro se, appeals the district court s dismissal of her lawsuit challenging the assignment of a residential mortgage and subsequent foreclosure on the subject property. This case has been referred to a panel of the court that, upon examination, unanimously agrees that oral argument is not needed. Fed. R. App. P. 34(a. In August 2005, Margelis and her then-husband obtained a loan from defendant IndyMac Bank to refinance the mortgage on their home. Margelis and her husband signed a promissory note evidencing their promise to pay the loan and granted defendant Mortgage Electronic Registration Systems, Inc. ( MERS, as nominee for the lender and its successors and assigns, a mortgage on the property. In December 2011, MERS assigned its interest in the mortgage to defendant Deutsche Bank National Trust Company ( Deutsche Bank. When Margelis defaulted on the loan by failing to make the monthly payments, Deutsche Bank commenced a foreclosure by advertisement. Deutsche Bank purchased the property at a foreclosure sale on

2 Case: Document: 22-2 Filed: 07/15/2015 Page: September 12, Pursuant to Michigan Compiled Laws (8, the statutory redemption period expired six months later, on March 12, On March 15, 2013, after expiration of the redemption period, Margelis commenced this action challenging the foreclosure in the Kent County Circuit Court. In her complaint, she alleged that: (1 the securitization of the promissory note irrevocably separated the note from the mortgage and rendered the mortgage null and void ; (2 none of the defendants had the authority to assign the mortgage or to foreclose on the property once the mortgage and the note were separated through securitization of the note; (3 defendant Deutsche Bank lacked standing to foreclose on the property because it did not own both the original promissory note and the original mortgage; (4 defendants Randall S. Miller ( Miller and Randall S. Miller & Associates, P.C. ( Miller & Associates, as the local lawyers carrying out the foreclosure, perpetrated fraud because they knew that Deutsche Bank lacked authority to foreclose on the property; and (5 defendant Deutsche Bank was not registered to conduct business in Michigan. Defendants Deutsche Bank, MERS, and MERSCORP, Inc. removed the action to federal court on the basis of diversity of citizenship and filed a motion to dismiss. Defendants Miller and Miller & Associates filed a motion to dismiss or for summary judgment. Defendants IndyMac Bank, Bill Beckman, and unknown parties named as Does 1-20 did not appear, and there is no record that they were ever served within the time for service. The district court granted the defendants motions, finding that Margelis s complaint failed to state a claim against any of the defendants. Margelis subsequently filed a timely motion for reconsideration, which the district court denied. In her brief on appeal, Margelis argues that: (1 the district court lacked jurisdiction; (2 Deutsche Bank lacked standing to foreclose on the property and none of the defendants had standing to seek relief from the lower court; and (3 Miller and Miller & Associates fraudulently commenced the foreclosure proceedings. Additionally, Margelis asks this court to impose sanctions against Dykema Gossett, PLLC, counsel for Deutsche Bank; MERS; and MERSCORP, Inc., alleging that they made fraudulent misrepresentations in the lower court.

3 - 3 - Margelis first argues that the district court improperly exercised jurisdiction over her complaint because Miller and Miller & Associates are Michigan residents and, thus, there was not complete diversity between the parties. We review de novo a district court s determination of subject matter jurisdiction. Hudson v. Coleman, 347 F.3d 138, 141 (6th Cir Diversity jurisdiction requires that the amount in controversy exceed $75,000 and that no plaintiff is a citizen of the same state as any defendant. 28 U.S.C. 1332; see Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005; Peters v. Fair, 427 F.3d 1035, 1038 (6th Cir Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity. Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 432 (6th Cir (internal quotation marks omitted. A defendant is fraudulently joined if it is clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law.... Id. at (internal quotation marks omitted. The district court properly held that Miller and Miller & Associates fall within the fraudulent joinder rule because, in a wrongful foreclosure action, there is no basis for recovery against the attorneys hired to carry out a client s foreclosure. As discussed below, Margelis s allegations of fraud against these defendants are baseless and cannot serve to defeat removal on diversity grounds. Case: Document: 22-2 Filed: 07/15/2015 Page: 3 We review a dismissal of a complaint pursuant to Federal Rule of Civil Procedure 12(b(6 de novo. City of Columbus, Ohio v. Hotels.com, L.P., 693 F.3d 642, 648 (6th Cir A complaint survives 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. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007. The district court did not err in concluding that Margelis s complaint failed to state any plausible claim for relief. First, all of Margelis s claims are premised on her erroneous belief that separation of the note and the mortgage precluded the assignment of the mortgage and the foreclosure. In Residential Funding Co., L.L.C. v. Saurman, 805 N.W.2d 183 (2011, the Michigan Supreme Court explained: It has never been necessary that the mortgage should be given directly to the beneficiaries. The security is always made in trust to secure obligations, and

4 Case: Document: 22-2 Filed: 07/15/2015 Page: the trust and the beneficial interest need not be in the same hands. Id. at 184 (citation and internal quotation marks omitted. Citing Saurman, we rejected a similar argument to Margelis s, explaining that, [u]nder Michigan law, it is lawful for the holder of the mortgage to be different from the holder of the debt and there is no bar to the subsequent transfer of the mortgage without a corresponding transfer of the underlying debt. Hargrow v. Wells Fargo Bank N.A., 491 F. App x 534, 538 (6th Cir. 2012; see Gardner v. Quicken Loans, Inc., 567 F. App x 362, 366 (6th Cir Thus, as the district court held, securitization of the loan did not preclude assignment of the mortgage and foreclosure, and Deutsche Bank, as the assignee and record-holder of the mortgage, was authorized to foreclose on the subject property under Michigan Compiled Laws (1(d. See Saurman, 805 N.W.2d at 184. Moreover, Margelis s claim that Miller and Miller & Associates acted fraudulently by commencing foreclosure proceedings when they knew that Deutsche Bank had no interest in the note or mortgage is similarly unavailing. Second, Margelis is unable to challenge the foreclosure after failing to redeem the property within the statutory redemption period. Non-judicial foreclosures, or foreclosures by advertisement, are governed by statute under Michigan law. Conlin v. Mortg. Elec. Registration Sys., Inc., 714 F.3d 355, 359 (6th Cir The statutory scheme provides steps that the mortgagee must follow in order to validly foreclose and controls the rights of the mortgagee and the mortgagor once the sale is completed. Id. Generally, the mortgagor must redeem the property within six months of the sheriff s sale, Mich. Comp. Laws (8, after which the mortgagor s right, title, and interest in the property are extinguished, Mich. Comp. Laws In Michigan, once the statutory redemption period elapses, the mortgagor must make a clear showing of fraud, or irregularity by the defendant in order for a court to entertain the setting aside of a foreclosure sale. Conlin, 714 F.3d at 359 (quoting Schulthies v. Barron, 167 N.W.2d 784, 785 (Mich. Ct. App The mortgagor must also show that she was prejudiced by the defendant s failure to comply with the foreclosure statute by demonstrating that she would have been in a better position to keep the property absent the defendant s noncompliance. Id. at Margelis s allegations concern the securitization of

5 - 5 - the loan and the alleged bifurcation of the note and the mortgage. This argument lacks merit and alleges neither fraud nor irregularity related to the foreclosure proceedings nor that she was prejudiced. Case: Document: 22-2 Filed: 07/15/2015 Page: 5 Finally, Margelis asks this court to impose sanctions against counsel for Deutsche Bank, MERS, and MERSCORP, Inc., alleging that they made fraudulent misrepresentations in the lower court. Again, Margelis s request is based on her meritless claims concerning note-splitting and securitization, and, thus, there is no basis for imposing sanctions. Accordingly, we affirm the district court s judgment. ENTERED BY ORDER OF THE COURT Deborah S. Hunt, Clerk