Foreclosure action under the Construction Lien Act (CLA); Whether a failure to redeem renders an appeal of a construction lien foreclosure action moot; Comparing Bryan v JP Morgan Chase Bank (foreclosure by advertisement) & Can IV Packard Square, LLC v Packard Square, LLC (judicial foreclosure); Use of credit bids; MCL 570.1123(3); Bank of Am, NA v First Am Title Ins Co; Disbursement of surplus funds; MCL 570.1118(2); MCL 570.1121(4); Due process; WL Acquisitions (WLA); Revised Judicature Act (RJA)

Addressing an issue of first impression, the court held that defendants’ failure to redeem the property at issue extinguished their rights related to it under the CLA and rendered many of the issues they raised on appeal moot. But it found that defendant-WLA (the title holder) may seek the surplus balance from the foreclosure to the extent any exists. Plaintiff and other claimants sued defendants for outstanding payment of construction services rendered. The trial court ruled for plaintiff and agreed to its foreclosure proposal. Plaintiff purchased the property, the trial court affirmed the sale, and the funds were disbursed among claimants. On appeal, the court largely agreed with plaintiff “that WLA’s failure to redeem within the redemption period render[ed] this case moot, with the exception of” WLA’s argument “regarding the trial court’s responsibility to determine the amount of a surplus (if any).” It noted that while “judicial foreclosures and foreclosures by advertisement are governed by the [RJA], and the foreclosure at issue in this case is governed by the CLA, [there is] no basis to treat the effect of foreclosure under the CLA differently than foreclosures under the RJA. All of these foreclosure statutes contain the same language vesting rights, title, and interest in the grantee of the resulting deed.” As such, “to the extent that WLA seeks to set aside the foreclosure sale,” its appeal was moot. The court then rejected WLA’s argument that the trial court should not have allowed plaintiff to make a credit bid at the foreclosure sale of the property. It found that: (1) “the CLA contemplates credit bids related to receivership foreclosures, and there is no reason not to apply the same provision” to judicial foreclosures, (2) “to prohibit credit bids would undermine the function of the statute,” and (3) “credit bids are allowed in other related contexts, and” there was no reason why they should not apply here. However, “it was an error to allow the credit bid without first determining the amount of” the lien or subsequently determining it. Without making the required findings under MCL 570.1118(2), the trial court “could not determine whether and to what extent WLA could recover surplus proceeds under MCL 570.1121(4).” Finally, the trial court “did not violate WLA’s right to due process by maintaining control over the proceedings with the mild sanction of ordering WLA’s counsel to be muted at times during the oral hearings.” WLA’s right to be heard was not violated. Affirmed in part, reversed in part, and remanded.