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In Equity Funding, Inc v Village of Milford, 342 Mich.App. 342, 350; 994 N.W.2d 859 (2022), this Court concluded that the plaintiff was afforded due process when it was able to address a newly-raised issue in a motion to file a surreply and a motion for reconsideration, noting that "[t]here is nothing in the record to suggest that the circuit court did not consider Equity's arguments."
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No. 357062
07-21-2022
EQUITY FUNDING, INC., Plaintiff-Appellant, v. VILLAGE OF MILFORD, Defendant-Appellee.
Aubrey H. Tobin, West Bloomfield, for Equity Funding, Inc. Kerr, Russell and Weber, PLC, Detroit (by Joanne Geha Swanson and Kevin A. McQuillan ) for the Village of Milford.
Aubrey H. Tobin, West Bloomfield, for Equity Funding, Inc.
Kerr, Russell and Weber, PLC, Detroit (by Joanne Geha Swanson and Kevin A. McQuillan ) for the Village of Milford.
Before: Borrello, P.J., and Shapiro and Hood, JJ.
Hood, J. Plaintiff-appellant, Equity Funding, Inc. (Equity), appeals from an order dismissing its quiet-title suit against lienholder-defendant, Village of Milford (Milford). Equity also sought a declaratory judgment as to its ownership and damages for slander of title. While the case was proceeding, the amount of the lien was paid in full, Milford released the lien, and Milford then moved to dismiss plaintiff's claims as moot since the property was no longer encumbered. The circuit court granted the motion, and Equity appeals.
We affirm the dismissal of the quiet-title and declaratory-judgment claims on mootness grounds. And although we conclude that the claim for slander of title was not rendered moot, we nevertheless affirm its dismissal, though on different grounds than the circuit court; we conclude that Equity failed to raise its slander-of-title claim within the applicable period of limitations.
I. BACKGROUND
In 2004, nonparty Milford Housing, LLC, borrowed money from Equity. The loan was secured by certain real property on Peters Road owned by Milford Housing, including the Woodland Apartments building. The building was in poor condition, and in 2009, Milford ordered its demolition. In 2010, Milford Housing defaulted on the loan. Equity initiated foreclosure proceedings, and in December of that year it obtained a sheriff's deed to the property. Before the redemption period expired, however, Milford Housing filed for bankruptcy, which stayed the demolition. Later, the parties agreed to partially lift the bankruptcy stay to allow Milford to demolish, which ultimately took place in 2012. Bankruptcy was discharged in January 2018. Thereafter, Milford Housing failed to redeem the property, and Equity acquired ownership of the Peters Road property on July 24, 2018. In September 2018, Milford recorded the notice-of-demolition lien. In 2020, when Equity sought to sell the property, it learned of the lien and filed this suit.
In its complaint, Equity alleged that it was the owner of the Peters Road property and that Milford's lien was illegitimate because (1) it was untimely filed, (2) the charges were not incurred against Equity, and (3) the lien was filed against Milford Housing, not Equity. Equity sought an order quieting title—declaring that Equity is the owner of the property, Milford has no interest in the property, and the lien is void in violation of Michigan law—and enjoining Milford from prosecuting any action related to the lien. Equity also sought damages in excess of $25,000 on the basis of its slander-of-title claim.
Eventually, Milford moved for summary disposition under MCR 2.116(C)(8) and (C)(10). Milford argued that Equity had failed to state a claim to quiet title or for slander of title because the lien was valid. Milford explained that Equity was aware that the building was dangerous and that Equity had consented to lift the bankruptcy stay to allow its demolition. According to Milford, the demolition cost constituted a lien against the property analogous to a tax lien, and not a personal construction lien, against Milford Housing. Milford asserted that there was no question of fact that it was entitled to place a lien against the property for the demolition costs and, thus, the court should grant judgment in its favor.
Equity responded by moving for partial summary disposition in its favor with regard to its quiet-title and declaratory-judgment counts under MCR 2.116(C)(7), (8), and (10). It argued that the lien was invalid because Milford recorded it without first giving Equity adequate notice or an opportunity to be heard with respect to the demolition process, depriving Equity of due process. Equity asserted that while Milford notified Milford Housing of the proceedings and complied with the statute requiring notice, Milford should have gone beyond its statutory obligations because it knew that Equity had an interest in the property. Equity also argued that the lien was barred by the doctrine of laches because Milford had unreasonably delayed recording it. While these cross-motions were pending, Equity's title-insurance company issued a check to Milford in the amount of $28,902.08 to satisfy the lien. Milford apparently accepted the check and recorded a satisfaction of lien to release the demolition lien. Milford informed the circuit court of these facts in its reply brief in support of its motion for summary disposition. Milford argued that Equity's claims were now moot because the lien had been satisfied and released.
Shortly after Milford filed its reply brief, the circuit court sua sponte waived oral argument and granted summary disposition in Milford's favor. The circuit court found that Equity had paid $28,902.08 to satisfy the demolition lien and that Milford had received the payment and executed a release of the lien. Consequently, the circuit court concluded that Equity's "claims for quiet title and slander of title are moot, and an ‘actual controversy’ no longer exists in this matter, which is a condition precedent to invoking declaratory relief under MCR 2.605(A)(1)...." Accordingly, the circuit court dismissed Equity's entire complaint under MCR 2.116(C)(10). Equity moved for reconsideration, asserting that Milford had "purposefully and clearly misrepresented" facts, most notably that it was Equity that paid off the lien. The circuit court denied the motion. This appeal followed.
Equity contends that it did not send a check to Milford to satisfy the demolition lien. Rather, according to Equity, the escrow agent for the title company "made a grave error" and "tendered the full amount of [Milford's] lien to [Milford] without the knowledge or consent of Equity Funding." Equity asserts that this payment was "unauthorized" and was made in violation of an indemnity agreement and addendum between Equity and the title company. The indemnity agreement provided that $60,000 deposited in escrow by Equity could be used by the title company to pay off the lien if the lien was not satisfied by December 31, 2020. The addendum extended the term of the indemnity agreement "until such time as there [was]" a final determination in this case regarding whether the lien could be enforced.
II. MOOTNESS
Equity asserts that the circuit court erred by granting summary disposition on mootness grounds because this issue was raised for the first time in a reply brief, thereby denying Equity an opportunity to respond to the issue. We disagree.
"Issues involving mootness are questions of law that are reviewed de novo." Adams v. Parole Bd. , 340 Mich.App. 251, 259; 985 N.W.2d 881 (2022). This Court also reviews de novo actions to quiet title. Beach v. Lima Twp. , 489 Mich. 99, 106, 802 N.W.2d 1 (2011). "Questions of law relative to declaratory judgment actions are reviewed de novo, but the trial court's decision to grant or deny declaratory relief is reviewed for an abuse of discretion." Barrow v. Detroit Election Comm. , 305 Mich.App. 649, 662, 854 N.W.2d 489 (2014) (quotation marks and citation omitted).
Equity correctly cites the general rule that reply briefs are limited to rebuttal. See Blazer Foods, Inc. v. Restaurant Props., Inc. , 259 Mich.App. 241, 252, 673 N.W.2d 805 (2003), citing MCR 7.212(G). This rule largely relates to presenting matters properly for appeal and the waiver of arguments raised for the first time in a reply. See id. ; see also Bronson Methodist Hosp. v. Mich. Assigned Claims Facility , 298 Mich.App. 192, 199, 826 N.W.2d 197 (2012) (noting that reply briefs are limited to rebuttal and that raising an issue for the first time in a reply brief does not suffice to present the matter for appeal). The Michigan Court Rules similarly limit reply briefs on pretrial motions to "rebuttal of the arguments in the nonmoving party or parties’ response brief...." MCR 2.116(G)(1)(a)(iii). But these restrictions do not apply to mootness, which both appellate and trial courts must address as it arises. See People v. Richmond , 486 Mich. 29, 35, 782 N.W.2d 187 (2010) ("Whether a case is moot is a threshold issue that a court addresses before it reaches the substantive issues of the case itself."); see also Mich. Chiropractic Council v. Comm'r of the Office of Fin. & Ins. Servs. , 475 Mich. 363, 371-372, 716 N.W.2d 561 (2006) (opinion by YOUNG , J.) (stating that because mootness is jurisdictional in nature, it may be raised at any time and cannot be waived), overruled on other grounds by Lansing Sch. Ed. Ass'n v. Lansing Bd. of Ed. , 487 Mich. 349, 352-353, 371 n 18, 792 N.W.2d 686 (2010) ; see also Anglers of the AuSable, Inc. v. Dep't of Environmental Quality , 489 Mich. 884, 796 N.W.2d 240 (2011) (order dismissing appeal on mootness grounds that arose during the pendency of the appeal).
Judicial power pertains to the right of courts of proper jurisdiction to determine actual cases and controversies arising between adversaries. See Anway v. Grand Rapids R. Co. , 211 Mich. 592, 616, 179 N.W. 350 (1920), citing Muskrat v. United States , 219 U.S. 346, 361, 31 S.Ct. 250, 55 L.Ed. 246 (1911). To ensure that the judiciary only exercises "judicial power" and does not usurp the power of other branches of government, Michigan courts and federal courts have developed justiciability doctrines, including mootness, to ensure that cases are appropriately before the court. See Mich. Chiropractic Council , 475 Mich. at 370, 716 N.W.2d 561 (opinion by YOUNG , J.). If an issue is moot, the court may not adjudicate the claim. See id . at 371-372, 716 N.W.2d 561. Further, the court must address mootness when it arises, whether that is in a reply brief or sua sponte. See id.
To the extent that Equity is arguing more generally that it was denied an opportunity to be heard on the issue, its argument is not supported by the record. "Where a court considers an issue sua sponte, due process can be satisfied by affording a party an opportunity for rehearing." Al-Maliki v. LaGrant , 286 Mich.App. 483, 485-486, 781 N.W.2d 853 (2009) ; see also Boulton v Fenton Twp , 272 Mich App 456, 463-464, 726 N.W.2d 733 (2006) (indicating that due process was satisfied when the trial court considered a motion for reconsideration after sua sponte entering an order granting summary disposition). Here, Equity may have been surprised by the new argument in Milford's reply brief regarding the payment that extinguished the lien, but that brief also put Equity on notice of Milford's new claim. Equity moved to file a surreply, in which it argued that its claims were not moot. After the circuit court granted summary disposition and denied the motion, Equity then moved for reconsideration. In its supporting brief, Equity stated its position that it had not paid the lien; instead, it asserted that the title company mistakenly paid from escrow funds. Equity asked that the action be reinstated and fully argued on the merits. The circuit court denied the motion under MCR 2.119(F)(3). Consequently, Equity had its opportunity to argue this issue before the circuit court.
There is nothing in the record to suggest that the circuit court did not consider Equity's arguments. Separately, Equity has now had the opportunity for a fulsome appeal on the mootness issue. Because mootness is a purely legal question, which we review de novo, Adams , 340 Mich.App. at 259, 985 N.W.2d 881, it cannot be said that Equity has not had a full opportunity to argue the issue.
We acknowledge that, after Milford released the lien, the better practice would have been for Milford to raise the mootness argument in a new motion for summary disposition rather than in a reply to Equity's response. See MCR 2.116(G)(1)(a)(iii). Nonetheless, once the circuit court became aware of the mootness issue, it was obligated to address it. See Mich Chiropractic Council , 475 Mich. at 371-372, 716 N.W.2d 561 (opinion by YOUNG , J.). Equity has failed to establish any error related to Milford raising the mootness issue for the first time in its reply.
In addition to its procedural argument, Equity also argues that its claims were not rendered moot as a result of the payoff of the lien. Equity's arguments regarding the validity of the lien and who paid it off are irrelevant. The fact remains that following the payment, Milford released the lien. To declare the lien invalid, then, by entering a declaratory judgment or quieting title in Equity, would have had no practical legal effect on the parties. Adams , 340 Mich.App. at 259, 985 N.W.2d 881. The lien had already been discharged, and Equity, in effect, achieved the result it sought—clearing title to the property. Therefore, with regard to the quiet-title and declaratory-judgment claims, there was no controversy left to resolve, and the circuit court correctly concluded they were moot. To the extent that Equity sought recovery of amounts expended in having to file suit to quiet title or for declaratory judgment, it ignores the fact that, absent an exception, Michigan follows the American rule for attorney fees and costs, under which each party pays their own attorney fees and costs. See Skaates v. Kayser , 333 Mich.App. 61, 84, 959 N.W.2d 33 (2020) ("[A]ttorney fees are not recoverable as an element of costs or damages unless expressly allowed by statute, court rule, common-law exception, or contract.") (quotation marks and citation omitted). Equity has not identified any exception to this rule with respect to its quiet-title and declaratory-judgment claims and, thus, has failed to establish that the circuit court erred by concluding that its claims to quiet title and for declaratory judgment were moot.
Whether payment of the lien rendered Equity's slander-of-title claim moot presents a more difficult question. Equity argues that regardless of whether the lien was paid and released, it still had a valid slander-of-title claim for damages against Milford for the filing of the allegedly invalid lien. We conclude that the lien's release did not render the slander-of-title claim moot.
Slander of title is a tort claim through which a litigant seeks to obtain special damages for the knowing filing of an invalid lien with the intent to cause the plaintiff injury. See Fed. Nat'l Mtg Ass'n v. Lagoons Forest Condo. Ass'n , 305 Mich.App. 258, 269-270, 852 N.W.2d 217 (2014). An action for slander of title exists under the common law and by statute. See B & B Investment Group v. Gitler , 229 Mich.App. 1, 8, 581 N.W.2d 17 (1998) ; MCL 565.108. "To prove slander of title under the common law, a claimant must show falsity, malice, and special damages, i.e., that the defendant maliciously published false statements that disparaged a plaintiff's right in property, causing special damages." Fed. Nat'l Mtg. Ass'n , 305 Mich.App. at 269-270, 852 N.W.2d 217 (quotation marks and citation omitted). The elements of a slander-of-title claim are the same under the statute or the common law. See B & B Investment Group , 229 Mich.App. at 8, 581 N.W.2d 17. By its very nature, a claim for special damages caused by the malicious filing of a false lien, or other statements disparaging a plaintiff's right to property, is not rendered moot by the subsequent discharge of that lien. See Huff v Jennings , 319 S.C. 142, 147, 459 S.E.2d 886 (App, 1995) ("The fact that the lien was thereafter removed does not extinguish any claim for slander of title [the plaintiff] may have for the thirty-two months the lien was attached to the property."); see also Bixeman v. Hunter's Run Homeowners Ass'n of St. John, Inc. , 36 N.E.3d 1074, 1079 n 5 (Ind App, 2015) (holding that the trial court erred when it determined that the plaintiff's slander-of-title claim was moot because the lien was invalid and stating that a slander-of-title claim is not rendered moot by discharge of a lien). In other words, while the lien has been discharged, an actual controversy still exists regarding whether Milford acted maliciously in filing an invalid lien and whether those actions caused Equity to suffer damages for which relief can be granted. For this reason, Equity's slander-of-title claim is justiciable, and the circuit court erred by dismissing the slander-of-title claim as moot.
A slander-of-title claim allows for special damages, which this Court has recognized includes litigation costs. See B & B Investment Group v. Gitler , 229 Mich.App. 1, 9, 581 N.W.2d 17 (1998) ("In Michigan, special damages have been recognized to include litigation costs[.]"). Equity's brief, however, does not specifically connect its entitlement to recovery of litigation costs to its slander-of-title claim.
This Court is not bound by caselaw from other jurisdictions, although it may find such cases persuasive. Voutsaras Estate v. Bender , 326 Mich.App. 667, 676, 929 N.W.2d 809 (2019). Of note, we were unable to locate any Michigan caselaw concluding that a slander-of-title claim is rendered moot by the release of a lien absent an agreement of the parties.
Milford's arguments asserting otherwise are unpersuasive. Milford asserts that satisfaction of the lien is a recognition of the lien's validity and proof of the absence of malice. Milford cites no authority in support of this position. Moreover, we are not persuaded that a third-party title-insurance company paying to resolve a lien renders the lien valid or indicates an absence of malice on the part of the lienholder. Milford also discusses Reserve at Heritage Village Ass'n v. Warren Fin. Acquisition, LLC , 305 Mich.App. 92, 125-126, 850 N.W.2d 649 (2014), in which we concluded that a slander-of-title claim was rendered moot by the release of an assignment. That case, however, is distinguishable because the parties in Reserve at Heritage Village Ass'n agreed to the release of the assignment. Id. Consequently, this Court concluded that the parties’ agreement rendered the remedies available from a slander-of-title claim moot. Id. Here, no such agreement exists, and Milford cites no Michigan caselaw concluding that a slander-of-title claim is rendered moot by the release of the allegedly malicious lien absent an agreement, let alone caselaw involving the release of a lien following a payment by a third-party title-insurance company. The release of the lien did not render Equity's slander-of-title claim moot.
III. STATUTE OF LIMITATIONS
Notwithstanding that the circuit court erred by concluding that Equity's slander-of-title claim was moot, the court reached the right decision, even if for the wrong reason. Dismissal of the slander-of-title claim was proper because Equity filed its claim beyond the applicable period of limitations. Though neither of the parties raised this issue, we have authority to raise and address issues we believe necessary to resolve a case. See Paschke v. Retool Indus. (On Rehearing) , 198 Mich.App. 702, 705, 499 N.W.2d 453 (1993) ("The court is obligated only to review issues that are properly raised and preserved; the court is empowered , however, to go beyond the issues raised and address any issue that, in the court's opinion, justice requires be considered and resolved."), rev'd on other grounds 445 Mich. 502, 519 N.W.2d 441 (1994). We address the applicability of the statute of limitations as a result. Whether a claim is barred by a statute of limitations is reviewed de novo. Stephens v. Worden Ins. Agency, LLC , 307 Mich.App. 220, 227-228, 859 N.W.2d 723 (2014).
An action for slander of title has a one-year period of limitations. See Bonner v. Chicago Title Ins. Co. , 194 Mich.App. 462, 470, 487 N.W.2d 807 (1992) ("[T]he statute of limitations applicable to actions for libel and slander applies to actions for slander of title."); MCL 600.5805(11) (providing that "[t]he period of limitations is 1 year for an action charging libel or slander"); see also MCL 565.107 (indicating that "[n]othing contained in this act shall be construed to extend the periods for the bringing of an action or for the doing of any other required act under any existing statutes of limitation ...."). Unless otherwise expressly provided, a period of limitations "runs from the time the claim accrues." MCL 600.5827. "The claim accrues at the time provided in [ MCL 600.5829 through MCL 600.5838 ], and in cases not covered by these sections the claim accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results." Id. None of the statutory provisions in MCL 600.5829 through MCL 600.5838 addresses accrual of a slander-of-title claim. The accrual for such a claim, therefore, occurs "at the time the wrong upon which the claim is based was done...." MCL 600.5827 ; see also Grist v. Upjohn Co. , 1 Mich.App. 72, 81, 134 N.W.2d 358 (1965) (indicating that for a libel or slander claim, the claim accrues at the time of publication, regardless of whether the defamed or slandered person is aware of the publication).
The wrong upon which Equity's slander-of-title claim is based is Milford's filing of the lien against the Peters Road property. Milford filed the lien on September 28, 2018. Thus, Equity's slander-of-title claim accrued on September 28, 2018. Because a slander-of-title claim has a one-year period of limitations, Equity had until September 28, 2019, to file its slander-of-title claim. Equity did not file its slander-of-title claim until July 22, 2020, nearly two years after Milford filed its lien. And although Equity claims that it did not learn of the lien until it obtained a title commitment for purposes of selling the property to a third party, knowledge of the filing of the lien was not necessary for the running of the limitations period. See Grist , 1 Mich.App. at 81, 134 N.W.2d 358. Because Milford filed the subject lien on September 28, 2018, and Equity did not file the complaint within one year of that date, Equity's claim was untimely and dismissal would have also been appropriate on this ground.
Because we resolve Equity's slander-of-title claim based on the period of limitations, we need not address the sufficiency of the pleadings.
IV. CONCLUSION
The circuit court properly determined that Equity's claims to quiet title and for a declaratory judgment were moot, given that the lien had been released. The circuit court dismissed the slander-of-title claim on mootness grounds, but this was error because the release did not extinguish the relief that could be obtained for special damages allegedly caused by a maliciously filed lien. Dismissal was justified on other grounds, however, because Equity did not raise its slander-of-title claim within the period of limitations. We affirm.
Equity also argues that the lien was invalid based on due-process violations and unenforceable under the doctrine of laches. We need not address these claims because dismissal was proper, as explained earlier.
Borrello, P.J., and Shapiro, J., concurred with Hood, J.