Whether the defendant-bank had the right to foreclose on the rest of the collateral after a building foreclosure sale; Foreclosure by advertisement under Michigan law; MCL 600.3280; Board of Trs. of Gen. Ret. Sys. v. Ren–Cen Indoor Tennis & Racquet Club (MI App.); FDIC v. Torres (Unpub. MI App.); BFP v. Resolution Trust Corp.; The amount of the debt; Denial of leave to amend the complaint; Head v. Timken Roller Bearing Co.; Unjust enrichment; Tkachik v. Mandeville (MI); Quantum meruit; Ordon v. Johnson (MI); The value of the foreclosed building; Rubin v. Fannie Mae (Unpub. 6th Cir.); MCL 600.3228

[This appeal was from the WD-MI.] The court held that the district court did not clearly err as a matter of fact by finding that the debt owed to the defendant-bank (Huntington) exceeded the value of the foreclosed building and did not err as a matter of law in holding that the plaintiffs’ claims for damages, replevin, and declaratory judgment all failed as a result. Baker Lofts borrowed money from Huntington, but defaulted on its loan payments. Huntington assigned the mortgage to its subsidiary, defendant-Fourteen, who foreclosed on the property. One of the plaintiffs was the assignee of Baker Lofts’ legal claims. The other plaintiff purchased Baker Lofts’ liquor license, in which Huntington asserted its security interest. The dispute concerned whether “Fourteen’s foreclosure extinguished all of Baker Lofts’ debt to Huntington.” The district court ruled that Huntington was entitled to foreclose on the remaining collateral because Baker Lofts still owed Huntington $2,257,549.94 after the building was sold. Under MCL 600.3280, “when a creditor forecloses by advertisement, the borrower’s debt is reduced to the extent of the ‘true value’ of the property, even if the actual foreclosure sale price was lower than that.” The district court correctly determined that two challenged loans could be considered in its calculation and concluded that Baker Lofts owed a total of $4,612,549.84 on the date of the foreclosure sale. It also correctly determined that “the ‘fair sheriff’s sale value’ of Baker Lofts’ building was $2,355,000.” While “Fourteen acquired the building at the foreclosure sale for $1,856,250” a third party purchased it for $2,355,000 when “Fourteen resold the building less than a year later.” The district court did not err by rejecting the valuation testimony of plaintiffs’ experts where “they did not independently investigate the revenues and liabilities of the building” and the appraisal by plaintiffs’ appraiser conflicted with his own pre-litigation appraisal of the property. The court declined to apply the “equitable merger” doctrine, finding that it would result in a “windfall for the debtor.” It then subtracted the value of the Baker Lofts building ($2,355,000) from the amount of the debt ($4,612,549.84), which left $2,257,549.84, the amount Baker Lofts still owed Huntington after the building foreclosure. The debt was not extinguished, and Huntington was entitled to foreclose on the rest of the collateral.