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Michigan attorneys face sanction for frivolous foreclosure delays

Appellate court awards taxable costs to lender

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Attorneys in Michigan who file what are ruled frivolous complaints or requests for delays in foreclosure or eviction cases can be sanctioned.

In a note to clients, Ballard Spahr warns that a Michigan appellate court ruled in February that baseless filings intended to delay those procedures can result in the borrower’s attorney facing sanction and fines.

“In Edgett v. Flagstar Bank, after multiple reviews of the borrower's loan modification requests, the bank completed foreclosure. The borrower then filed a four-count complaint alleging quiet title, unjust enrichment, breach of implied agreement/specific performance, and breach of Michigan's loan modification process,” the report notes.

A copy of the ruling can be viewed here.

“Lenders should note that sanctions may be available against a borrower's counsel who files multiple frivolous complaints simply to delay foreclosure or eviction proceedings,” Ballard Spahr tells clients.

In the case of Edgett v. Flagstar, the court granted the bank's motion for summary disposition finding that the borrower failed to show fraud or irregularity to set aside the sheriff's sale.

Further, the court ruled, the statute of frauds barred the borrower's claims of unjust enrichment and breach of implied contract, and that the bank did not violate Michigan's loan modification process.

The trial court declined to award the bank sanctions and both parties appealed.

“The borrower's appeal was dismissed because she never filed an opening brief. Reviewing the bank's cross-appeal, the appellate court held that the borrower's lawsuit epitomizes frivolousness and remanded to the trial court for an assessment of reasonable attorneys' fees to be imposed only against borrower's counsel,” Ballard Spahr’s note says. “Specifically, the appellate court concluded the borrower's complaint was not well grounded in fact and was not warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law.”

The court also found that the lawsuit was clearly initiated to cause unnecessary delay. The appellate court also awarded taxable costs to the bank.

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