BANK ONE NA V OTTAWA COUNTY REGISTER OF DEEDS
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STATE OF MICHIGAN
COURT OF APPEALS
BANK ONE NA,
UNPUBLISHED
May 20, 2008
Plaintiff-Appellant,
v
OTTAWA COUNTY REGISTER OF DEEDS and
CENTURY PARTNERS LLC and SCOTT
CARLSON and MATTHEW MILMEISTER and
BENJAMIN KAMP and DEBORAH KAMP,
No. 277081
Ottawa Circuit Court
LC No. 05-053094-CZ
Defendants-Appellees.
Before: Jansen, P.J., and Zahra and Gleicher, JJ.
PER CURIAM.
Plaintiff appeals as of right a March 9, 2007, “order taxing costs and attorney fees” in the
amount of $30,899.24 in favor of defendant Century Partners LLC (Century) and defendants
Matthew Milmeister (Milmeister) and Scott Carlson (Carlson), principals of Century. We
affirm.
I. Basic Facts and Proceedings
This case arises from the foreclosure of a 3.03 acre parcel of real property located at
10200 Fillmore Street, Ottawa County, Michigan (subject property). On March 14, 1994, John
Hoelsema and Karen Hoelsema, the owners, granted a mortgage on the subject property to
Select-A-Loan in exchange for $98,000 (senior mortgage). On December 8, 1999, the
Hoelsemas granted a second mortgage on the subject property to plaintiff in exchange for
$79,125 (junior mortgage). The Hoelsemas defaulted on both mortgages.
Both loans were foreclosed. The junior mortgage went to sheriff’s sale on June 17, 2004.
The senior mortgage went to sheriff’s sale on July 15, 2004. Plaintiff was the successful bidder
at the sheriff’s sale for the junior mortgage and was granted a sheriff’s deed indicating a sixmonth redemption period. Century was the successful bidder at the sheriff’s sale for the senior
mortgage and was granted a sheriff’s deed indicating a one-year redemption period. Under MCL
600.3240, a parcel of single residential real property over three acres is subject to a one-year
redemption period, and residential real property three acres or under is subject to a six-month
redemption period. The law firm that initiated foreclosure of the senior mortgage indicated in
the notice of foreclosure sale a six-month redemption period. On February 24, 2005, however,
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the law firm filed in Oakland County Circuit Court an affidavit of scrivener’s error indicating
that the “correct redemption period is One year.” The affidavit of scrivener’s error was also filed
in the Ottawa County Circuit Court on March 14, 2005.
On July 1, 2005, plaintiff sought to redeem the subject property and, Robert Hemphill,
(Hemphill), a paralegal for plaintiff counsel contacted Milmeister requesting a redemption
figure. Milmeister, unaware of the affidavit of scrivener’s error, told Hemphill that based on the
notice of foreclosure sale posting and the sheriff’s deed, the redemption period had expired.
That same day, Hemphill confirmed his belief that the subject property was over 3 acres, and
allegedly called Milmeister to challenge any assertion that the redemption period had expired
before July 15, 2005. Milmeister did not recall whether Hemphill called again. Hemphill also
allegedly sent Milmeister a fax reiterating his position, but Milmeister denied having received
such a fax. Plaintiff did not redeem the subject property before July 15, 2005.
On August 14, 2005, plaintiff filed a complaint against Century, Milmeister and the
Ottawa County Register of Deeds (OCRD). The complaint alleged Century and Milmeister
committed fraud, misrepresentation and negligence by refusing to provide plaintiff the correct
redemption deadline and redemption figure, which plaintiff claims prevented it from redeeming
the subject property and protecting plaintiff’s junior mortgage. Plaintiff also requested a writ of
mandamus ordering the OCRD “to calculate and accept an appropriate tender from Plaintiff for
the redemption of the senior lien on the subject property.” On August 8, 2006, plaintiff filed an
amended complaint to include subsequent purchasers of the subject property, defendants
Benjamin and Deborah Kamp.
On August 29, 2006, the OCRD moved for summary disposition arguing that it had no
legal duty to provide plaintiff a redemption figure. The OCRD specifically argued that as of
March 31, 2005, revised MCL 600.32401 took effect and expressly prohibited the OCRD from
1
Revised MCL 600.3240, provides, in relevant part, that:
(1) A purchaser’s deed is void if the mortgagor . . . redeems the entire premises
sold by paying the amount required under subsection (2), within the applicable
time limit prescribed in subsections (7) to (12), to the purchaser or the purchaser’s
executors, administrators, or assigns, or to the register of deeds in whose office
the deed is deposited for the benefit of the purchaser.
(2) The amount required to be paid under subsection (1) is the sum that was bid
for the entire premises sold, with interest from the date of the sale at the interest
rate provided for by the mortgage, together with the amount of the sheriff’s fee
paid by the purchaser under section 2558(2)(q), and an additional $5.00 as a fee
for the care and custody of the redemption money if the payment is made to the
register of deeds. The register of deeds shall not determine the amount necessary
for redemption. The purchaser shall attach an affidavit with the deed to be
recorded under this section that states the exact amount required to redeem the
property under this subsection, including any daily per diem amounts, and the
(continued…)
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(…continued)
date by which the property must be redeemed shall be stated on the certificate of
sale. The purchaser may include in the affidavit the name of a designee
responsible on behalf of the purchaser to assist the person redeeming the property
in computing the exact amount required to redeem the property. The designee
may charge a fee as stated in the affidavit and may be authorized by the purchaser
to receive redemption funds. The purchaser shall accept the amount computed by
the designee.
*
*
*
(4) If after the sale the purchaser, the purchaser’s heirs, executors, or
administrators, or any person lawfully claiming under the purchaser or the
purchaser’s heirs, executors, or administrators pays taxes assessed against the
property, amounts necessary to redeem senior liens from foreclosure,
condominium assessments, homeowner association assessments, community
association assessments, or premiums on an insurance policy covering any
buildings located on the property that under the terms of the mortgage it would
have been the duty of the mortgagor to pay if the mortgage had not been
foreclosed and that are necessary to keep the policy in force until the expiration of
the period of redemption, redemption shall be made only upon payment of the
sum specified in subsection (2) plus the amounts specified in this subsection with
interest on the amounts specified in this subsection from the date of the payment
to the date of redemption at the interest rate specified in the mortgage, if all of the
following are filed with the register of deeds with whom the deed is deposited:
(a) An affidavit by the purchaser or someone in his or her behalf who has
knowledge of the facts of the payment showing the amount and items
paid.
(b) The receipt or copy of the canceled check evidencing the payment of
the taxes, amounts necessary to redeem senior liens from foreclosure,
condominium assessments, homeowner association assessments,
community association assessments, or insurance premiums.
(c) An affidavit of an insurance agent of the insurance company stating
that the payment was made and what portion of the payment covers the
premium for the period before the expiration of the period of redemption.
*
*
*
(6) The register of deeds shall indorse on the documents filed under subsection (4)
the time they are received. The register of deeds shall record the affidavit of the
purchaser only and shall preserve in his or her files the recorded affidavit,
receipts, insurance receipts, and insurance agent’s affidavit until expiration of the
period of redemption.
*
*
*
(13) The amount stated in any affidavits recorded under this section shall be the
(continued…)
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providing a redemption figure.2 Plaintiff admitted it did not request a redemption figure from the
OCRD until after the effective date of the revised MCL 600.3240. After a hearing, the trial court
(…continued)
amount necessary to satisfy the requirements for redemption under this section.
2
Compare Former MCL 600.3240, which provided in relevant part, that:
(1) A purchaser’s deed is void if the mortgagor, the mortgagor’s heirs, executors,
or administrators, or any person lawfully claiming under the mortgagor, the
mortgagor’s heirs, executors, or administrators redeems the entire premises sold
by paying the amount required under subsection (2), within the applicable time
limit prescribed in subsections (7) to (12), to the purchaser, the purchaser’s
executors, administrators, or assigns, or to the register of deeds in whose office
the deed is deposited for the benefit of the purchaser.
(2) The amount required to be paid under subsection (1) is the sum that was bid
for the entire premises sold, with interest from the time of the sale at the rate
percent borne by the mortgage, together with the amount of the sheriff’s fee paid
by the purchaser under section 2558(2)(q), and an additional $3.00 as a fee for the
care and custody of the redemption money if the payment is made to the register
of deeds.
*
*
*
(4) If after the sale the purchaser, the purchaser’s heirs, executors, or
administrators, or any person lawfully claiming under the purchaser, the
purchaser’s heirs, executors, or administrators pays taxes assessed against the
property, amounts necessary to redeem senior liens from foreclosure,
condominium assessments, homeowner association assessments, community
association assessments, or premiums on an insurance policy covering any
buildings located on the property that under the terms of the mortgage it would
have been the duty of the mortgagor to pay if the mortgage had not been
foreclosed and that are necessary to keep the policy in force until the expiration of
the period of redemption, redemption shall be made only upon payment of the
sum specified in subsection (2) plus the amounts specified in this subsection with
interest on the amounts specified in this subsection from the date of the payment
to the date of redemption at the rate specified in the mortgage, if all of the
following are filed with the register of deeds with whom the deed is deposited:
(a) An affidavit by the purchaser or someone in his or her behalf who has
knowledge of the facts of the payment showing the amount and items
paid.
(b) The receipt or copy of the canceled check evidencing the payment of
the taxes, amounts necessary to redeem senior liens from foreclosure,
(continued…)
-4-
granted the OCRD’s motion for summary disposition, finding revised MCL 600.3240 applicable
and that revised MCL 600.3240 prohibited the OCRD from providing a redemption figure.
On September 5, 2006, Century, Milmeister and Carlson filed a motion for summary
disposition. They argued that senior lien holders are not obligated to provide a redemption figure
to those seeking redemption. Rather, they claimed that all the information needed to determine a
redemption figure was provided on the affidavit of sale, which includes the date of purchase,
purchase price and interest rate. In response, plaintiff claimed that while it may be able to
determine costs under revised MCL 600.3240(2), it could not determine costs paid to maintain
the property, i.e., insurance and taxes, under revised MCL 600.3240(4).
During oral argument on Century’s motion for summary disposition, the trial court
specifically asked defense counsel the significance of the following statement contained in
revised MCL 600.3240(2):
The purchaser shall attach an affidavit with the deed to be recorded under this
section that states the exact amount required to redeem the property under this
subsection, including any daily per diem amounts, and the date by which the
property must be redeemed shall be stated on the certificate of sale.
Defense counsel ceded that the affidavit had not been filed, but maintained the affidavit was not
required at the time the sheriffs’ deed was filed. Defense counsel further argued that plaintiff
could readily determine a redemption figure under MCL 600.3240(2), and further noted that
costs under MCL 600.3240(2) are collectible only to the extent that certain evidence reflecting
payment of those costs3 is filed pursuant to MCL 600.3240(2)(a), (b) and (c).
In a written opinion, the trial court granted summary disposition in favor of Century,
Milmeister and Carlson. The trial court held that, under former or revised MCL 600.3240,
plaintiff could have tendered payment to the purchaser or the OCRD, but that payment
nonetheless must be made within one year, which was not done. The trial court further noted
that the instant case was not an equitable proceeding, though if it were, plaintiff would not be
entitled to relief because plaintiff knew that Milmeister’s representation of the redemption date
was false yet failed to make any good faith effort to pay the redemptive figure.
Century, Milmeister and Carlson thereafter filed a motion for costs and sanctions, arguing
plaintiff had no good faith basis to support its claims. Plaintiff responded that the instant case
(…continued)
condominium assessments, homeowner association assessments,
community association assessments, or insurance premiums.
(c) An affidavit of an insurance agent of the insurance company stating that the
payment was made and what portion of the payment covers the premium for the
period prior to the expiration of the period of redemption.
3
In regard to the costs, MCL 600.3240(4) also provides for interest “from the date of the
payment to the date of redemption at the interest rate specified in the mortgage.”
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was unique in that during the one-year redemptive period, revised MCL 600.3240 took effect and
altered the redemption requirements by prohibiting the OCRD from providing a redemptive
figure and requiring that purchaser attach an affidavit to the sheriff’s deed stating the exact
amount for redemption.
In a written opinion, the trial court granted Century’s, Milmeister’s and Carlson’s motion
for costs and sanctions. The trial court found that “plaintiff’s facts do not constitute fraud or a
basis on which it is entitled to relief.” The trial court entered an order awarding $30,899.24 to
Century, Milmeister and Carlson, which plaintiff now appeals.
II. Attorneys’ Fees
Plaintiff argues that its complaint was not frivolous and that the trial court improperly
awarded attorneys’ fees.
The determination of a frivolous lawsuit requires the trial court to make a factual finding
that considers the particular circumstances of the case. See Powell Prod, Inc v Jackhill Oil Co,
250 Mich App 89, 94-95; 645 NW2d 697 (2002). “Whether a claim is frivolous within the
meaning of MCR 2.114[4] and MCL 600.2591[5] depends on the facts of the case,” and review of
4
MCR 2.114, entitled, “Signatures of Attorneys and Parties; Verification; Effect; Sanctions,”
provides, in part, that:
(A) Applicability. This rule applies to all pleadings, motions, affidavits, and other
papers provided for by these rules. See MCR 2.113(A). In this rule, the term
“document” refers to all such papers.
(B) Verification.
(1) Except when otherwise specifically provided by rule or statute, a
document need not be verified or accompanied by an affidavit.
(2) If a document is required or permitted to be verified, it may be verified
by
(a) oath or affirmation of the party or of someone having
knowledge of the facts stated; or
(b) except as to an affidavit, including the following signed and
dated declaration: “I declare that the statements above are true to
the best of my information, knowledge, and belief.”
In addition to the sanctions provided by subrule (E), a person who
knowingly makes a false declaration under subrule (B)(2)(b) may
be found in contempt of court.
(C) Signature.
(continued…)
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(…continued)
(1) Requirement. Every document of a party represented by an attorney
shall be signed by at least one attorney of record. A party who is not
represented by an attorney must sign the document.
*
*
*
(D) Effect of Signature. The signature of an attorney or party, whether or not the
party is represented by an attorney, constitutes a certification by the signer that
(1) he or she has read the document;
(2) to the best of his or her knowledge, information, and belief formed
after reasonable inquiry, the document is well grounded in fact and is
warranted by existing law or a good-faith argument for the extension,
modification, or reversal of existing law; and
(3) the document is not interposed for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in the cost of
litigation.
(E) Sanctions for Violation. If a document is signed in violation of this rule, the
court, on the motion of a party or on its own initiative, shall impose upon the
person who signed it, a represented party, or both, an appropriate sanction, which
may include an order to pay to the other party or parties the amount of the
reasonable expenses incurred because of the filing of the document, including
reasonable attorney fees. The court may not assess punitive damages.
(F) Sanctions for Frivolous Claims and Defenses. In addition to sanctions under
this rule, a party pleading a frivolous claim or defense is subject to costs as
provided in MCR 2.625(A)(2). The court may not assess punitive damages.
5
MCL 600.2591, entitled, “Frivolous action; costs and fees,” provides that:
(1) Upon motion of any party, if a court finds that a civil action or defense to a
civil action was frivolous, the court that conducts the civil action shall award to
the prevailing party the costs and fees incurred by that party in connection with
the civil action by assessing the costs and fees against the nonprevailing party and
their attorney.
(2) The amount of costs and fees awarded under this section shall include all
reasonable costs actually incurred by the prevailing party and any costs allowed
by law or by court rule, including court costs and reasonable attorney fees.
(3) As used in this section:
(a) “Frivolous” means that at least 1 of the following conditions is met:
(i) The party's primary purpose in initiating the action or asserting
the defense was to harass, embarrass, or injure the prevailing party.
(continued…)
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a trial court’s finding of frivolity is for clear error. Kitchen v Kitchen, 465 Mich 654, 662; 641
NW2d 245 (2002).
Pursuant to MCL 600.2591, a claim is frivolous when: (1) the party’s
primary purpose was to harass, embarrass or injure the prevailing party; (2) the
party had no reasonable basis to believe the underlying facts were true; or (3) the
party’s position was devoid of arguable legal merit. The filing of a signed
pleading that is not well-grounded in fact and law subjects the filer to similar
sanctions pursuant to MCR 2.114(E). [Jerico Const, Inc v Quadrants, Inc, 257
Mich App 22, 36-37; 666 NW2d 310 (2003), citing Yee v Shiawassee Company
Bd of Comm’rs, 251 Mich App 379, 407; 651 NW2d 756 (2002) (Internal citation
omitted).]
Further, MCL 2.625, entitled, “Taxation of Costs,” provides that, “[i]n an action filed on or after
October 1, 1986, if the court finds on motion of a party that an action or defense was frivolous,
costs shall be awarded as provided by MCL 600.2591.”
Here, we cannot conclude the trial court clearly erred in concluding that plaintiff’s
complaint was devoid of arguable legal merit.
To establish a prima facie claim of fraudulent misrepresentation, a plaintiff must
prove (1) the defendant made a material representation; (2) the representation was
false; (3) when the defendant made the representation, the defendant knew that it
was false, or made it recklessly, without knowledge of its truth or falsity, and as a
positive assertion; (4) the defendant made the representation with the intention
that the plaintiff would act on it; (5) the plaintiff acted in reliance on the
representation; and (6) the plaintiff suffered damage. [Derderian v Genesys
Health Care Systems, 263 Mich App 364, 378; 689 NW2d 145 (2004) (Citation
omitted).]
Further,
“a false statement of fact, made without knowledge of its falsity or intent to
deceive, is actionable [under Michigan’s doctrine of innocent misrepresentation]
if relied upon by the other party to the contract to their detriment and the party
that made the false statement is unjustly enriched.” [Id. at 380-381 (Citations
omitted).]
(…continued)
(ii) The party had no reasonable basis to believe that the facts
underlying that party's legal position were in fact true.
(iii) The party’s legal position was devoid of arguable legal merit.
(b) “Prevailing party” means a party who wins on the entire record.
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In regard to plaintiff’s claims for fraud, misrepresentation and innocent
misrepresentation, plaintiff cannot show that it reasonably relied on Milmeister’s representations.
“There can be no fraud where a person has the means to determine that a representation is not
true.” Nieves v Bell Industries, Inc, 204 Mich App 459, 464; 517 NW2d 235 (1994), citing
Montgomery Ward & Co v Williams, 330 Mich 275, 47 NW2d 607 (1951); Webb v First of
Michigan Corp, 195 Mich App 470, 474, 491 NW2d 851 (1992). Further, “someone who knows
that a representation is false cannot rely on that representation. Such knowledge prevents not
only reasonable reliance, it prevents any reliance at all.” Phinney v Perlmutter, 222 MichApp
513, 535; 564 NW2d 532 (1997). At the onset, we note that plaintiff’s brief on appeal
recognized that “[it] might not have been able to prove all six elements.” Here, plaintiff clearly
did not believe Milmeister’s representation that the redemption period for the subject property
was only six months. Thus, plaintiff could not have relied on this representation. Further, the
refusal to provide plaintiff with a redemption figure cannot reasonably be considered a
representation, as nothing was related to plaintiff. Even assuming that Milmeister’s refusal is
construed as an assertion of incorrect redemption figure, Hemphill testified that he could have
readily ascertained a correct redemption figure from the affidavit attached to the sheriff’s deed.
Indeed, he testified that it was not unusual for persons seeking to redeem to verify the
redemption figure they had been provided. “There can be no fraud where a person has the means
to determine that a representation is not true.” Nieves, supra at 464.
Plaintiff also claims that revised MCL 600.3240 “created a duty in a third party purchaser
in a senior sheriff’s lien to assist the redeeming party.” Even assuming that revised MCL
600.3240 required defendants to assist plaintiff in redeeming the property,6 we nonetheless
cannot conclude that the trial court clearly erred in finding plaintiff’s claims frivolous. In regard
to plaintiff’s claims of misrepresentation, fraud and innocent fraud, plaintiff cannot maintain
these claims merely on the basis of defendants’ failure to follow a statutory duty when plaintiff
plainly did not rely on defendant’s representations. Further, plaintiff’s negligence claim is
without support. Specifically, plaintiff cannot establish that defendant’s failure to file an
affidavit pursuant to revised MCL 600.3240 proximately caused plaintiff to fail to redeem the
6
On this point, we find persuasive the decision of a panel of this Court in Wolf v Homecomings,
per curiam opinion of the Court of Appeals, December 19, 2006 (Docket No 270169), slip op at
2, which held that, “because there is an ‘absence of a clear expression by the Legislature’ that the
amended language of MCL 600.3240 be retroactively applied, . . . the statutory revisions were
not applicable to defendant[s] retroactively.” Accordingly, defendants were not required to
submit an affidavit with the sheriff’s deed “that states the exact amount required to redeem the
property,” after revised MCL 600.3240(2) took effect.
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subject property. Revised MCL 600.3240 in no way indicates that the failure to file a
redemption figure with the sheriff’s deed would toll the redemption period. Yet, plaintiff knew
the correct redemption date and took no legal action to preserve or enforce its claim until after
the redemption date had passed. Further, plaintiff could have ascertained the correct redemption
figure and provided the sum to defendants or the OCRD, yet did not even attempt to do so.
Thus, we conclude the trial court did not clearly err in finding plaintiff’s claims devoid of
arguable legal merit.
Affirmed.
/s/ Kathleen Jansen
/s/ Brian K. Zahra
/s/ Elizabeth L. Gleicher
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