Mortgages Res judicata Quiet title action.

Byline: Michigan Lawyers Weekly Staff

Where a complaint challenging the validity of a mortgage foreclosure was dismissed as barred by the res judicata doctrine, the dismissal judgment should be affirmed despite the plaintiffs' assertion that a prior quiet title action in state court was not resolved on the merits.

"Arthur Talbot and Kelley Bezrutch lost their home in a state eviction suit brought by their home mortgagee. They then lost a related quiet title action against the home's new owner in which they claimed that the mortgagee fraudulently manufactured its ownership claim.

"Most contentious is the question whether the dismissal of the quiet title action was 'on the merits.' The state court dismissed the quiet title action because Plaintiffs did not redeem the home in the statutory six-month period following foreclosure, meaning they had no interest in the home. That rationale was also adopted by the state appellate court in affirming the trial court.

"Under Michigan law, an involuntary dismissal does not 'operate[] as an adjudication on the merits' if the dismissal was for lack of jurisdiction. ... While the state court's opinion does not use the term 'standing,' Michigan cases, we note, have characterized this theory of dismissal as one of 'standing.' Plaintiffs characterize the dismissal of their quiet title action as a jurisdictional holding (and thus not 'on the merits') because the dismissal was due to the absence of statutory standing as a result of their lack of interest in the property.

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