Lawsuit claims Wayne County foreclosures were illegal

Paul Egan / The Detroit News

Detroit -- Tens of thousands of Wayne County foreclosures -- and potentially hundreds of thousands across the state -- are unlawful because sheriffs did not follow state law when they conducted foreclosure auctions, an attorney said Wednesday.

On Tuesday, Bloomfield Hills attorney Paul Nicoletti filed a proposed class-action suit in federal court seeking to set aside the Wayne County foreclosures of 46 plaintiffs and potentially hundreds of thousands of others in similar circumstances.

The main issue relates to the sheriff's deeds issued to buyers of properties sold by the court order to satisfy debts. The complaint alleges that former Sheriff Warren Evans did not sign the appointment of the sheriff's deputy who executed the deeds, as required by the letter of the law. Instead, as in most Michigan counties, the undersheriff made the appointment, Nicoletti said.

"It's a hyper-technical argument, but it's due process," said Nicoletti, who points to a handful of rulings he says support his position.

Critics say the suit has little hope of success.

"The sad thing about it is it's probably giving false hope to people," said Ralph Roberts, a Macomb County Realtor who has authored books and delivered lectures on the foreclosure crisis. "If you miss dotting an 'i' or crossing a 't,' it doesn't change the whole process."

Nicoletti points to an August ruling by U.S. Bankruptcy Judge Paul J. Tucker that set aside a foreclosure based on a similar technical argument -- the time period for which the deputy who handled the sale was appointed. Tucker ruled evidence suggested the deputy was appointed for 2008, but not for 2007, when the sale took place.

Yvonne Cross, a plaintiff, said she was put out of her Detroit home in March but believes there were numerous technical problems with the foreclosure.

"I hope that everybody in this lawsuit gets their property back free and clear," Cross said.

However, it's not clear that would happen even if the lawsuit was successful. In the bankruptcy case, the judge set aside the foreclosure but reinstated the mortgage, meaning the plaintiff still had the debt to deal with.

Evans, now Detroit police chief, and current Wayne County Sheriff Benny Napoleon had no comment.

pegan@detnews.com (313) 222-2069