More Legal Maneuvering Over The Scope And Applicability Of Michigan's 'One Action' Rule Governing Mortgage Foreclosures By Advertisement

In order to commence and complete in Michigan a foreclosure of a mortgage by advertisement, there must not have been instituted "an action or proceeding . . . at law, to recover the debt secured by the mortgage or any part of the mortgage" unless that action has either been "discontinued" or an "execution on a judgment rendered in that action or proceeding has been returned unsatisfied, in whole or in part." MCL § 600.3204(b). The rationale behind this rule is to prohibit harassment of the mortgagor by requiring it to defend two proceedings at once and to forbid a double recovery on the debt. See, e.g., Lee v. Clary, 38 Mich. 223, 227 (1878); Larzelere v. Startkweather, 38 Mich. 96 (1878).

In a previous alert dated April 23, 2012 , the authors discussed the long-recognized exception to this rule when a mortgagee commences an action for an in personam judgment against a guarantor of the mortgage debt. See, e.g., United States v. Leslie, 421 F.2d 763 (6th Cir. 1970) and Church & Church, Inc. v. A-1 Carpentry, 281 Mich. App. 330, 766 N.W.2d 30 (2008), for court decisions recognizing and applying this exception. This earlier alert discussed a recent Michigan Court of Appeals decision holding that a mortgagor's action against a guarantor of the mortgage debt triggered the application of the one-action rule to invalidate a foreclosure sale when the loan documents defined the mortgage indebtedness as including...