TRI-COUNTY PETROLEUM INC V ABN AMRO MORTGAGE GROUP INC
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STATE OF MICHIGAN
COURT OF APPEALS
TRI-COUNTY PETROLEUM, INC.,
UNPUBLISHED
November 22, 2005
Plaintiff-Appellant,
v
No. 262279
Wayne Circuit Court
LC No. 04-424931-CK
ABN AMRO MORTGAGE GROUP, INC.,
Defendant-Appellee,
and
AHMAD H. LAILA,
Defendant.
Before: Davis, P.J., and Fitzgerald and Cooper, JJ.
PER CURIAM.
Plaintiff appeals as of right the order denying its motion for summary disposition and
granting summary disposition in favor of defendant, ABN Amro Mortgage Group, Inc. (ABN),
in this action to quiet title. We affirm.
This Court reviews de novo the grant or denial of summary disposition to determine if the
moving party is entitled to judgment as a matter of law. Williams v Medukas, 266 Mich App
505, 507; 702 NW2d 667 (2005), citing Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817
(1999). A motion for summary disposition under MCR 2.116(C)(10) tests the factual sufficiency
for a claim and must be supported by affidavits, pleadings, depositions, admissions, or other
evidence submitted by the parties. Id. The trial court must consider the evidence in the light
most favorable to the party opposing the motion. Id. Where the proffered evidence fails to
establish a genuine issue regarding any material fact, the moving party is entitled to judgment as
a matter of law. MCR 2.116(G)(4); MCR 2.116(I)(1) and (2); Williams, supra at 507, quoting
Maiden, supra at 120.
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Plaintiff argues on appeal that its notice of lis pendens has priority over ABN’s earlier
acquired, but later-recorded, mortgage. We disagree. The prioritization of encumbrances on
property in Michigan is governed by statute. To qualify for the protections of Michigan’s
recording acts, MCL 565.1 et seq., a person must have a conveyance that is first recorded and be
a bona fide purchaser. MCL 565.29.1 A notice of lis pendens is “[a] notice, recorded in the
chain of title to real property, required or permitted in some jurisdictions to warn all persons that
certain property is the subject matter of litigation, and that any interests acquired during the
pendency of the suit are subject to its outcome.” Black’s Law Dictionary (7th ed); see also
Backowski v Solecki, 112 Mich App 401, 412; 316 NW2d 434 (1982).
In Hammond v Paxton, 58 Mich 393, 397; 25 NW 321 (1885), the Court held that an
unrecorded mortgage had priority over a notice of lis pendens that was recorded after the
mortgage was taken:
The notice [of lis pendens] filed at that time only affected those who should
obtain interests in the property after the filing of the notice during the pendency of
the suit. Hammond’s interest was acquired by the execution and delivery of the
mortgage three days previous to that time, and consequently he was unaffected by
this notice of lis pendens. [Id.]
Thus, in Michigan, a notice of lis pendens operates prospectively only, as a warning to future
purchasers that they take the property subject to the outcome of pending litigation.
Here, ABN took the mortgage on the property on March 20, 2001, and acquired an
interest in the property. Plaintiff filed suit against Hassan Leila2 on May 13, 2002, and recorded
the notice of lis pendens on August 20, 2002. ABN therefore acquired its interest in the property
more than a year before the suit was filed and the lis pendens recorded, not during the pendency
of litigation. Because a notice of lis pendens can only operate prospectively to warn future
purchasers that they take subject to the pending litigation, ABN’s earlier-acquired interest has
priority over any interest that plaintiff may acquire as a result of the lis pendens, irrespective of
when ABN’s interest was recorded. See Hammond, supra at 397.
Furthermore, plaintiff was not a good-faith purchaser within the meaning of Michigan’s
recording statutes. “A good faith purchaser is one who purchases without notice of a defect in
the vendor’s title.” Michigan National Bank v Morren, 194 Mich App 407, 410; 487 NW2d 784
1
MCL 565.29 provides, in pertinent part:
Every conveyance of real estate within the state hereafter made, which shall not
be recorded as provided in this chapter, shall be void as against any subsequent
purchaser in good faith and for a valuable consideration, of the same real estate or
any portion thereof, whose conveyance shall be first duly recorded.
2
Hassan Leila purchased the property on August 26, 1997. On March 20, 2001, Hassan sold the
property to defendant Ahmad Laila. ABN loaned Ahmad $208,000 and received a mortgage on
the property. The sale and mortgage were not recorded at that time.
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(1992). A purchaser is deemed to have examined the record and to have notice of the contents of
all instruments in the chain of title and of the contents of instruments referred to in an instrument
in the chain of title. MCL 600.2701; see Boraks v Siegel, 366 Mich 308, 311-312; 115 NW2d
126 (1962).
ABN recorded its claim of interest on June 4, 2003, giving notice that ABN obtained a
mortgage on the property from defendant Ahmad Laila on March 20, 2001. Plaintiff purchased
the property at a sheriff’s sale on July 10, 2003. Thus, when plaintiff purchased the property, it
was on at least constructive notice regarding ABN’s interest and was not a good-faith purchaser.
MCL 600.2701; see Boraks, supra at 311-312. The trial court properly denied plaintiff’s motion
for summary disposition and granted ABN’s motion for summary disposition.
Affirmed.
/s/ Alton T. Davis
/s/ E. Thomas Fitzgerald
/s/ Jessica R. Cooper
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