J EDWARD KLOIAN V THOMAS VANFOSSEN
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STATE OF MICHIGAN
COURT OF APPEALS
J. EDWARD KLOIAN,
UNPUBLISHED
January 21, 2010
Plaintiff-Cross-Appellant,
v
THOMAS EDWARD VAN FOSSEN, Personal
Representative of the Estate of William Van
Fossen, Deceased,
No. 287812
Washtenaw Circuit Court
LC No. 84-028688-CK
Defendant/Third-Party PlaintiffAppellee/Cross-Appellee,
and
VICTOR T. WEBER,
Third-Party Defendant/IntervenorAppellant.
Before: Murphy, C.J., and Jansen and Zahra, JJ.
PER CURIAM.
This appeal and cross-appeal represent yet another link in the chain of complex and
protracted litigation concerning a certain tract of real property located at 400-416 West Huron
Street in the city of Ann Arbor (the property). In 2007, this Court remanded the matter to the
circuit court to allow Victor T. Weber (Weber) to intervene and for a determination whether
Weber possessed any rights or interests in the property. Kloian v Van Fossen, unpublished
opinion per curiam of the Court of Appeals, issued March 29, 2007 (Docket Nos. 262953;
262954) (Kloian I). On remand, the circuit court determined that Weber possessed no rights or
interests in the realty, and issued an order granting summary disposition in favor of defendant
Thomas Edward Van Fossen (Van Fossen). Weber now appeals by right, arguing among other
things that the circuit court lacked jurisdiction over him on remand because he had previously
been dismissed from this action, that he was not adequately notified of the circuit court
proceedings on remand, and that he possessed a valid real estate mortgage in the property which
was improperly extinguished by the circuit court. Plaintiff J. Edward Kloian (Kloian) cross
appeals, arguing among other things that the circuit court improperly denied him the opportunity
to be heard on remand, that he and Weber were prejudiced because Van Fossen’s motion for
summary disposition was prematurely decided, that there existed genuine issues of material fact
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precluding the grant of Van Fossen’s motion for summary disposition, and that this matter
should be remanded to a different circuit judge. We affirm in all respects, albeit partially for
different reasons than those relied on by the circuit court. This matter should now be considered
closed.1
I. Basic Facts and Procedural History
This Court previously summarized the early factual background of this dispute in Kloian
I, slip op at 2:
In 1978, Kloian leased the Property to William Van Fossen.[2] At the
same time, Kloian granted Van Fossen an option to purchase the Property. A
dispute later arose between the parties over nonpayment of rent, alleged breaches
of the lease agreement, and whether an option was effectively terminated or
exercised. In 1984, Kloian sued Van Fossen for unpaid rent. Kloian then filed an
amended complaint, seeking a declaration that he terminated the option. Van
Fossen filed several counterclaims, including a request for specific performance
of the option to purchase the Property.
In 1991, the circuit court held that Van Fossen was entitled to specific
performance. In 1995, the circuit court ordered that the parties enter into a land
contract for the sale of the Property to Van Fossen.
Pursuant to the circuit court’s order, the parties entered into a land contract for the
purchase of the property on May 12, 1995, which was recorded three days later. Because there
remained outstanding disputes concerning costs and attorney fees, the circuit court action
remained open. Under the terms of the land contract, Kloian was to sell the property to Van
Fossen for the purchase price of $340,000, payable in full, with interest, by May 12, 1996.
Section 3(a) of the land contract provided that “Seller may mortgage the premises as security for
Seller’s debts so long as the mortgage does not adversely affect any of Purchaser’s rights under
this contract.”
In January 1997, eighteen months after the land contract was executed, Kloian mortgaged
his vendor’s interest to Weber for $200,000. The mortgage note provided that Kloian would pay
back the mortgage indebtedness in full, with interest, by no later than January 6, 1999. The
mortgage was timely recorded.
1
We have revised the caption in this case to reflect the true relationships among the various
parties. See MCR 7.216(A)(2). In particular, we have designated Weber as an “Intervenor” in
accordance with this Court’s remand instructions in Kloian I. See footnote 9.
2
William Van Fossen died during the pendency of this matter, and the court permitted
substitution by his personal representative Thomas Van Fossen. This substitution has had no
relevant procedural effect for purposes of this case, and we therefore refer to both William Van
Fossen and his personal representative as “Van Fossen” throughout this opinion.
-2-
According to Kloian, Van Fossen failed to pay off the land contract by May 1996, and
Kloian was therefore unable to timely pay off his mortgage indebtedness to Weber. Weber, a
resident of Nevada, thereafter filed a foreclosure action in the United States District Court for the
Eastern District of Michigan in May 2004. In response, Van Fossen moved in November 2004
to add Weber as a necessary party to the Washtenaw Circuit Court case, asserting that Weber’s
presence was necessary for the circuit court to adjudicate Van Fossen’s interest in the property.
In Kloian I, slip op at 13, this Court succinctly explained what happened next:
On November 12, 2004, Weber quitclaimed his interest in the Property
back to Kloian with a purported reservation of Weber’s rights pursuant to the
mortgage agreement. Thereafter, Kloian moved for denial of Van Fossen’s
motion to add Weber, arguing that he was no longer a necessary party in light of
the latter quitclaim deed. Kloian argued that, as simply a mortgagee rather than a
property owner, Weber was not an affected party. Nevertheless, the circuit court
granted Van Fossen’s motion to add Weber as a necessary party.
In December 2004, Van Fossen filed a third-party complaint against
Weber, seeking a declaration of Weber’s rights in the Property. In his complaint,
Van Fossen asserted: “Weber appears to have a legal interest in the Property that
must be determined and adjudicated in order for [Van Fossen] to receive clear and
marketable title to the Property.”
On April 14, 2005, the circuit court held an evidentiary hearing for the purpose of
determining the interests of the parties and the exact amounts owed by Kloian and Van Fossen in
this case. At the hearing, Weber’s counsel admitted that whatever interest Weber had in the
property was “secondary to . . . the Van Fossen interest” and that Weber was “willing to stipulate
that his mortgage is subordinate to Mr. Van Fossen’s land contract interest.” The circuit court
noted that former Washtenaw Circuit Judge Karl Fink had already ruled in 1996 that Kloian
owed Van Fossen substantial attorney fees in this matter—which it referred to as “exemplary
damages.” The court then reconfirmed that Kloian did, indeed, owe substantial attorney fees as a
result of his fraud and illegal conduct, as well as his improper and unnecessary attempts to
prolong the litigation. The circuit court took testimony concerning the nature of Van Fossen’s
legal expenses and which of the expenses were attributable to Kloian’s improper conduct. The
court also heard testimony concerning the outstanding balance due on the land contract between
Kloian and Van Fossen. After hearing the testimony, the circuit court remarked from the bench:
All right, first of all I’m going to go backwards on this matter. This Court
is in no position to make an equitable ruling on the equitable relief sought by the
third-party Plaintiff here again with regard to this alleged Weber mortgage. I
think that’s due in large part to the circumstances of this litigation. I’m going to
find that the motion to allow the filing of the third-party complaint was
improvidently granted by the Court. I’m going to dismiss the third-party
complaint without prejudice. Any mortgage interest claimed by Weber will need
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to be resolved in other litigation.[3] It’s not going to be resolved in this lawsuit at
this stage of the proceeding certainly.
It is important, however, to move on to make a final order with regard to
the interests of the Defendant and the Plaintiff in this parcel . . . as well as the
assessment of the attorney fees and expenses as previously ordered by Judge Fink
based on his findings. I’m going to proceed to do that.
I have considered all of the various means of calculation here. This is an
unusual assessment in the legal sense that attorney fees, actual attorney fees are
not ordered absent a statute other than as exemplary damages. That was the
assessment by Judge Fink in this case, and it remains this Court’s obligation to
determine the amount of those attorney fees.
I have considered all of these matters. I do not believe that the bankruptcy
fees are included within the terms of that order or within the contemplation of
Judge Fink in that order. I also believe that the proper assessment of fees would
be attorney fees and expenses which are both reasonable and necessary on the one
hand, and actually paid on the other hand.
Based on those findings I am going to find that the total amount of
attorneys’ fees and expenses [with] interest accruing as those fees and expenses
were paid due from the Plaintiff to the Defendant in this case is $2,173,361.97.
Now the Plaintiff is entitled to a credit for the amount owing on the balloon
payment under the land contract. That . . . has been resolved through the course
of this litigation.
The Court finds that the total amount due as of May 1st of this year on that
land contract including all interest is $494,946.32. As [against] Mr. Kloian [Van
Fossen] is entitled to ownership and fee of the property, and is further entitled to a
balance due to [him] from [Kloian] of $1,678,415.65.
After finding that Van Fossen’s earlier motion to file the third-party complaint had been
“improvidently granted” and dismissing Weber from the action, the circuit court entered its final
order in early May 2005. The court ruled that Van Fossen was entitled to attorney fees—again
described as “exemplary damages”—in the amount of $2,173,361.97, and that Kloian was
entitled to a setoff in the amount of $494,946.32, which represented the total amount that
remained due and owing on the land contract. After deducting this setoff amount, the court
entered final judgment in favor of Van Fossen in the amount of $1,678,415.65. The court ruled
that Van Fossen had “satisfied all obligations under the Land Contract,” transferred the property
to Van Fossen “free and clear,” and ordered the register of deeds “to accept this Judgment Entry
3
By “other litigation,” the circuit court presumably meant that Weber’s interest would be
determined in the pending federal court foreclosure action.
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as transferring any and all ownership interest of Kloian, his heirs, beneficiaries, mortgagees,
lessees, and assignees in the real property . . . to Van Fossen.”
This Court summarized the next steps of the litigation in Kloian I, slip op at 13-14:
In May 2005, Weber filed against Van Fossen a claim of appeal from the
circuit court’s final judgment.
A few days later, Weber filed a post-judgment motion to intervene in the
lower court action under MCR 2.209(A)(3), alleging that the final order
negatively impacted his mortgage interest in the Property. After hearing oral
arguments on the motion, the circuit court denied the motion, explaining its ruling
as follows:
With regard to the motion to intervene, I’m going to deny
that motion. Of course, you can ask the Court of Appeals to
intervene in the appeal which is really what you seek here anyway,
but I’ll leave that to them to determine if they want you in the
appeal or not.
Weber then moved to intervene in this Court, which was denied.[4] This
Court also later denied Van Fossen’s motion to dismiss Weber’s appeal for lack
of jurisdiction.[5]
Also in May 2005, Kloian filed a claim of appeal from the same circuit court judgment. This
Court consolidated Weber’s appeal with Kloian’s appeal “to advance the efficient administration
of the appellate process.”6
On appeal, Kloian argued that the circuit court erred by reforming the parties’ original
agreement and by granting specific performance to Van Fossen, thereby allowing him to
complete his acquisition of the property. Among other things, Kloian also argued that Van
Fossen had acted with unclean hands during the circuit court proceedings, that the circuit court
had erred by awarding Van Fossen $2,173,361.97 in attorney fees, that the circuit court had erred
by determining that the remaining balance due under the land contract was $494,946.32, and that
the circuit court had applied an incorrect interest rate in reaching its calculations. This Court
rejected Kloian’s arguments, affirming the circuit court’s ruling with respect to all of Kloian’s
claims of error. Kloian I, slip op at 2-12.
4
Kloian v Van Fossen, unpublished order of the Court of Appeals, entered March 22, 2006
(Docket No. 262954).
5
Kloian v Van Fossen, unpublished order of the Court of Appeals, entered June 12, 2006
(Docket No. 262954).
6
Kloian v Van Fossen, unpublished order of the Court of Appeals, entered August 1, 2005
(Docket Nos. 262953; 262954).
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In contrast, this Court reversed and remanded for further proceedings with respect to
Weber’s claim of error. Id. at 12-17. Weber argued on appeal that he had a constitutionally
protected mortgage interest in the property. He complained that although the circuit court’s
judgment had effectively extinguished this mortgage interest, he had not been entitled to
intervene or meaningfully participate in the circuit court proceedings. As an initial matter, this
Court observed that although Weber was no longer a “party” to the underlying action at the time
of the circuit court’s ruling because the third-party complaint had been earlier dismissed, he
nonetheless had an interest in the subject matter of the litigation and had been aggrieved by the
circuit court’s ruling. Id. at 14-15. Accordingly, this Court determined that it had jurisdiction
under MCR 7.203(A) to consider Weber’s appeal of right—even though he was no longer
technically a party to the circuit court proceedings. Kloian I, slip op at 15.
With respect to Weber’s substantive claim, this Court held that Weber should have been
permitted to intervene in the circuit court action. Id. at 16-17. Although this Court reserved
judgment concerning exactly what type of interest Weber held in the property, it noted that he
nevertheless held some kind of interest and should have been given a meaningful opportunity to
be heard before the interest was extinguished by way of the circuit court’s ruling. Indeed, the
Kloian I Court held that “this Court is not the proper forum in which to litigate the exact nature
of Weber’s interest in the property. That determination should be made by the circuit court.
Accordingly, we conclude that Weber did have a right to intervene in the lower court action.” Id.
at 16. This Court thus remanded to allow Weber to intervene and for a consideration of Weber’s
arguments. Id. at 17.7
On July 19, 2007, the United States District Court for the Eastern District of Michigan
dismissed the still-pending federal foreclosure action without prejudice pursuant to the doctrine
of abstention announced in Colorado River Water Conservation Dist v United States, 424 US
800; 96 S Ct 1236; 47 L Ed 2d 483 (1976). Weber v Van Fossen, 496 F Supp 2d 826, 831 (ED
Mich, 2007). Weber thereafter appealed the dismissal of the federal action to the United States
Court of Appeals for the Sixth Circuit.
Following remand, the circuit court held a status conference in early March 2008. No
record of this status conference is contained in the lower court file. Indeed, the circuit court
register of actions indicates that the status conference was “held off record.” However, it was
apparently decided at the status conference that Van Fossen would proceed by filing a motion for
summary disposition as to Weber’s purported interest in the property.8
7
On May 21, 2007, this Court denied reconsideration of its opinion in Kloian I. Kloian v Van
Fossen, unpublished order of the Court of Appeals, entered May 21, 2007 (Docket Nos. 262953;
262954). Our Supreme Court denied Kloian’s application for leave to appeal, Kloian v Van
Fossen, 480 Mich 1003 (2007), and subsequently denied his motion for reconsideration as well,
Kloian v Van Fossen, 480 Mich 1140 (2008).
8
Kloian asserts in his brief on appeal that although he was notified of this status conference, the
circuit court “refused to allow him to participate or even be present at the conference.” As there
is no record or transcript of the status conference contained in the lower court file, we cannot
(continued…)
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In April 2008, Van Fossen filed a motion for summary disposition pursuant to MCR
2.116(C)(10), arguing that it was beyond factual dispute (1) that he was the fee simple owner of
the property, (2) that Kloian’s interest was limited to that of a land contract vendor, (3) that the
interest of a land contract vendor is an interest in personalty rather than in realty, and (4) that
Kloian had not granted the mortgage to Weber until after the execution of the land contract. As a
consequence, Van Fossen contended that Weber’s mortgage actually encumbered only Kloian’s
personalty interest and not Van Fossen’s realty interest, and asserted that Weber therefore had no
recognizable interest in the real property.9
An amended proof of service contained in the lower court file indicates that Van Fossen’s
motion for summary disposition was sent via first-class mail on April 21, 2008, to Victor Weber
at “9416 Gold Mountain Drive, Las Vegas, NV 89134-7800.” According to the same proof of
service, Van Fossen’s motion for summary disposition was also sent on April 15, 2008, to
Kloian, Kloian’s former attorney Michael Mixer, and Weber’s attorneys Hugh Davis and Glenn
Matecun.10 The circuit court scheduled a hearing on Van Fossen’s motion for summary
disposition for May 14, 2008.
On May 13, 2008, one day before the scheduled hearing, the circuit court received a
response to Van Fossen’s motion for summary disposition and a motion for stay from Weber’s
attorney Hugh Davis. Davis stated that although he had previously represented Weber on appeal
to this Court in Kloian I, he had never before represented Weber before the circuit court, and was
therefore making only a “limited appearance” on Weber’s behalf. Indeed, it is true that attorney
Glenn Matecun, and not Davis, had previously represented Weber in the circuit court. Davis
(…continued)
assess Kloian’s claim in this regard.
9
In the caption of his motion for summary disposition, Van Fossen continued to list Weber only
as a “Third-Party Defendant.” However, this was clearly inaccurate as the original third-party
complaint had earlier been dismissed and no new third-party complaint had ever been filed
against Weber. Instead, the caption of Van Fossen’s motion for summary disposition should
have designated Weber as an “Intervenor,” in accordance with this Court’s remand instructions
in Kloian I. We acknowledge that the circuit court never referred to Weber as an intervenor and
never directed the parties to list Weber as an intervenor on their papers and filings. Nonetheless,
it is clear from this Court’s opinion in Kloian I that Weber’s status following remand to the
circuit court was that of an intervening party. We have therefore revised the caption of this case
accordingly. See footnote 1.
10
Although Van Fossen’s motion for summary disposition was originally dated April 15, 2008, it
was not date-stamped by the circuit court until April 28, 2008. Weber argues in his brief on
appeal that it is highly unlikely that Van Fossen would have served the motion for summary
disposition on him via first-class mail on April 21, 2008, when the motion was not even filed
with the court until April 28, 2008. In essence, Weber attempts to attack the validity of the
amended proof of service by suggesting that Van Fossen fabricated it after the fact. We reject
Weber’s suggestion. There is nothing in the court rules that requires a party to file his or her
motion for summary disposition with the court before he or she serves it on the other party or
parties. Indeed, it is common practice for a party to send his or her motion to the circuit court for
filing on the same day that he or she serves it on the other parties via first-class mail. In such
cases, the date of mailing on the proof of service will always be earlier than the date of filing that
is ultimately stamped on the copy received by the court.
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pointed out that Weber was a resident of Nevada and argued that the parties’ diversity of
citizenship militated in favor of staying the circuit court proceedings pending the outcome of the
appeal in the federal action. Davis also asserted that Weber had not received a copy of Van
Fossen’s motion for summary disposition and that Weber therefore had inadequate notice that his
rights and interests would be considered by the circuit court on May 14, 2008. Davis stated that
he was personally very busy with an ongoing trial, and that he might be unable to appear at the
hearing of May 14, 2008. Finally, Davis asserted that the courts had no authority to sua sponte
reinstate Weber as a party to this matter, and that it was therefore necessary for Van Fossen to
file new pleadings and take additional affirmative steps to reestablish personal jurisdiction over
Weber before Weber could be brought back into the case. Attached to the response was the
affidavit of Victor Weber, dated May 13, 2008, in which Weber averred that he was a resident of
Nevada, that he never received a copy of Van Fossen’s motion for summary disposition, and that
he had just learned of the motion’s existence “within the last few days.”
Van Fossen and Weber were both represented by counsel at the motion hearing of May
14, 2008. Weber was represented by attorney Wilson P. Tanner, who indicated that he was
“appearing in place of [attorney Davis], who I understand is appearing specially or in a limited
fashion according to . . . the pleadings that I’ve read.” Kloian was also personally present at the
hearing, but it appears from the record that the circuit court refused to allow him to participate in
the proceedings. Counsel for Van Fossen suggested that Weber had been properly reinstated as a
party by this Court’s opinion in Kloian I, and argued that there had consequently been no need to
file new pleadings against him or to reacquire jurisdiction over him. Counsel for Van Fossen
explained that she had originally sent copies of the motion for summary disposition to Weber’s
attorneys Matecun and Davis at the time the motion was prepared, but that she had thereafter
decided to serve a copy of the motion on Weber personally as well. This is why the amended
proof of service in the lower court file indicated that the motion had been sent to Weber in
Nevada on April 21, 2008, while it had already been sent to Matecun and Davis on April 15,
2008.
Van Fossen’s attorney asserted that because the United States District Court had
dismissed the federal action on the basis of Colorado River abstention, there was no reason to
stay the circuit court case. She then argued that Weber’s mortgage interest was merely a security
interest in Kloian’s personalty, and was not an interest in the real property itself. She cited
several cases for the proposition that a land contract vendor’s interest is in the nature of
personalty rather than realty.
Attorney Tanner noted that Davis had only asked him a day or two earlier to appear at the
hearing. Tanner argued that the circuit court had previously dismissed Weber from the case and
that Van Fossen had therefore been required to take some affirmative steps beyond the mere
filing of a motion for summary disposition to reinstate him as a party. Tanner also contended
that Weber had not been personally served with a copy of Van Fossen’s motion for summary
disposition. He suggested that service on Matecun and Davis was ineffective because Matecun
no longer represented Weber and Davis had only represented Weber before the Court of
Appeals.
The circuit court explained that, contrary to Tanner’s assertion, Matecun was still counsel
of record for Weber and that there had never been any order allowing Matecun to withdraw from
the case. The court pointed out that both Matecun and Davis had been served with the motion
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for summary disposition and that both attorneys had been notified of the scheduled motion
hearing. The court observed that Matecun and Davis should have advised Weber of the
proceedings. Tanner responded by arguing that Matecun and Davis “felt like they no longer
represented [Weber] . . . .” Tanner asked the court to postpone the matter for “a couple of
weeks” to allow “Mr. Davis to respond” to Van Fossen’s motion for summary disposition. The
circuit court noted that Weber’s attorneys had already been given adequate time to respond, and
that Weber had received adequate notice of his opportunity “to be heard on the nature of his
alleged interest in this litigation.”
In late July 2008, after the filing of certain objections by Weber, the circuit court issued
an opinion and order granting Van Fossen’s motion for summary disposition. The circuit court
first observed that Weber had “cited no authority to support his contention that the . . . court must
again establish jurisdiction over him.” The court then went on to address this Court’s remand
instructions in Kloian I and the nature of Weber’s mortgage interest:
This Court provided Weber with the “opportunity to be heard” as required
by the Court of Appeals and will decide his interest on the merits. It is wellsettled Michigan law that a vendor’s interest in the land contract is personal
property. Darr v First Federal Savings & Loan Assn, 426 Mich 11 (1986). In
contrast, the vendee’s interest in the land contract is real property which descends
to his heirs upon his death. Darr, su[pr]a. A land contract vendor holds legal
title to the subject property only as a security interest to ensure payment on the
land contract. Organic Chemical Site PRP Group v Total Petroleum, Inc, 58 F
Supp 2d 755 (WD Mich, 1999).
The Court finds that there is no dispute that on January 6, 1997, when
Kloian purported to grant a mortgage on the real property to Weber, Kloian was
merely a land contract vendor. Therefore, Kloian could not impair Van Fossen’s
right to the land by a subsequent mortgage to Weber. Kloian could not convey,
and Weber never had an interest in the real property above a mere lien on
Kloian’s land contract vendor interest.
The Court finds that Weber has no interest in the real property . . . nor is
there any basis to preclude application of the setoff of payoff against the
exemplary damages. The Court further finds that Van Fossen has satisfied all
obligations under the land contract, and the real property . . . is hereby transferred
to Van Fossen, free and clear of the land contract and the mortgage interest
claimed by Weber. The Court further finds that the interests of Kloian, Weber,
and Van Fossen are hereby resolved with respect to [the property]. The Court
orders that the Register of Deeds and Recorder’s Office shall accept this
Judgment as transferring any and all ownership interests or land contract interests
of Kloian, his heirs, beneficiaries, mortgagees, including but not limited to Weber,
lessees, and assignees in the real property . . . .
On August 13, 2008, Weber, through attorney Davis, moved for reconsideration of the
circuit court’s opinion and order. Weber again argued that Van Fossen’s service of the motion
for summary disposition had been defective and that the service on attorneys Matecun and Davis
was not sufficient to apprise him of the circuit court’s proceedings on remand. He also
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contended that the circuit court had effectively given impermissible retroactive effect to the land
contract mortgage act, MCL 565.356 et seq., and that Van Fossen’s motion for summary
disposition had been prematurely heard because it was considered fewer than 28 days after it was
served. Weber’s motion for reconsideration was denied.
Then, on August 28, 2008, Kloian moved to intervene or to set aside the circuit court’s
opinion and order on the ground that he had possessed a financial stake in the determination of
Weber’s interest but had been denied the opportunity to participate in the status conference and
motion hearing. The circuit court ruled that because this Court had already fully and finally
decided Kloian’s interests in Kloian I, Kloian had no right to participate in the circuit court
proceedings on remand. Accordingly, the motion was denied.
On September 16, 2008, Weber timely filed a claim of appeal of the circuit court’s July
2008 opinion and order. Kloian filed a claim of cross appeal shortly thereafter.
On April 13, 2009, the United States Court of Appeals for the Sixth Circuit affirmed the
United States District Court’s earlier dismissal of Weber’s federal foreclosure action, albeit not
on the basis of Colorado River abstention. Weber v Van Fossen, 322 Fed Appx 429 (CA 6,
2009). The United States Court of Appeals observed that Weber’s claims had been fully litigated
and decided by the Michigan circuit court, and that the federal foreclosure action was therefore
barred by the doctrine of res judicata. Id.
II. Standards of Review
We review de novo the circuit court’s ruling on a motion for summary disposition, Spiek
v Dep’t of Transportation, 456 Mich 331, 337; 572 NW2d 201 (1998), and whether a court has
personal jurisdiction over a party, Oberlies v Searchmont Resort, Inc, 246 Mich App 424, 426;
633 NW2d 408 (2001). Similarly, we review de novo issues of statutory interpretation and the
proper interpretation and application of the court rules. Detroit v Ambassador Bridge Co, 481
Mich 29, 35; 748 NW2d 221 (2008); Peters v Gunnell, Inc, 253 Mich App 211, 225; 655 NW2d
582 (2002). Finally, we review de novo whether the law of the case doctrine applies, Ashker v
Ford Motor Co, 245 Mich App 9, 13; 627 NW2d 1 (2001), whether a party has been denied due
process, York v Civil Service Comm, 263 Mich App 694, 699; 689 NW2d 533 (2004), and all
other questions of law, Cowles v Bank West, 476 Mich 1, 13; 719 NW2d 94 (2006).
III. Weber’s Appeal
On appeal, Weber raises several claims of error and contends that Van Fossen’s motion
for summary disposition was improperly granted for several reasons. He first argues that the
circuit court did not have jurisdiction over him following this Court’s remand in Kloian I
because the circuit court had previously dismissed him from the case and he was never properly
reinstated as a party to the litigation. He also argues that he was never personally served with a
copy of Van Fossen’s motion for summary disposition, that Van Fossen’s motion for summary
disposition was prematurely decided, that this Court already ruled that his mortgage interest was
an interest in real property, and that the circuit court erred by extinguishing his mortgage interest
because Van Fossen had defaulted on his obligations under the land contract. Lastly, Weber
argues that he was denied his right to due process of law when the circuit court extinguished his
mortgage interest without affording him a meaningful opportunity to participate in the
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proceedings on remand and that Van Fossen has acted in bad faith throughout the pendency of
this litigation. We address these arguments in turn.
A. Weber’s Status Following Remand and Personal Jurisdiction
Weber first argues that the circuit court did not have personal jurisdiction over him
following this Court’s remand in Kloian I because the circuit court had previously dismissed him
from the case and he was never properly reinstated as a party. He asserts that it was necessary
for Van Fossen to file new pleadings against him and for the circuit court to reestablish
jurisdiction over his person following remand by this Court. We disagree.
We first note the disingenuous nature of Weber’s argument in this regard. It is true that
the circuit court had earlier dismissed Weber from the case after determining that Van Fossen’s
motion for leave to file the third-party complaint had been improvidently granted. But Weber,
himself, thereafter asked this Court to allow him to rejoin the litigation and to intervene in the
circuit court proceedings. After hearing Weber’s arguments, this Court in Kloian I remanded the
matter to the circuit court with instructions to allow Weber to intervene. Once a party is
permitted to intervene in an action, he or she becomes a party and is bound by all judgments
rendered in the action. Blue Cross & Blue Shield of Michigan v Eaton Rapids Community Hosp,
221 Mich App 301, 307; 561 NW2d 488 (1997); Eyde v Meridian Charter Twp, 118 Mich App
43, 50; 324 NW2d 775 (1982). Further, this Court has the authority to “allow substitution,
addition, or deletion of parties . . . .” MCR 7.216(A)(2). Having specifically sought and
obtained from this Court permission to intervene in the circuit court on remand, Weber may not
now argue that he was not a party to the proceedings following remand to that court. See In re
Gazella, 264 Mich App 668, 679; 692 NW2d 708 (2005) (observing that an appellant “may not
harbor error, to which he or she consented, as an appellate parachute”); Joba Construction Co,
Inc v Burns & Roe Inc, 121 Mich App 615, 629; 329 NW2d 760 (1982) (noting that a party who
requests and obtains favorable relief is estopped from later assigning as error the fact that the
requested relief was granted). Because this Court had already added Weber as an intervening
party, see MCR 7.216(A)(2), we reject his claim that Van Fossen was required to take additional
affirmative steps to make him a party to the litigation following remand to the circuit court.
With respect to the issue of personal jurisdiction, Weber argues that he has never
consented to jurisdiction and that the circuit court therefore lacked general jurisdiction over his
person pursuant to MCL 600.701. Pursuant to MCL 600.701(3), a Michigan court may exercise
general personal jurisdiction over a party who consents thereto. A party’s consent to the exercise
of general personal jurisdiction under MCL 600.701(3) need not be express, but may be implied.
Unistrut Corp v Baldwin, 815 F Supp 1025, 1027 (ED Mich, 1993); see also Burger King Corp v
Rudzewicz, 471 US 462, 472 n 14; 105 S Ct 2174; 85 L Ed 2d 528 (1985). We conclude that
when Weber specifically asked this Court to add him to the circuit court litigation as an
intervening party, he implicitly consented to the circuit court’s exercise of jurisdiction over his
person on remand. See MCL 600.701(3).
Moreover, even if Weber had not consented to the circuit court’s exercise of personal
jurisdiction, he has conceded in his brief on appeal that “his business dealings in Michigan create
the basis for jurisdiction . . . .” Pursuant to MCL 600.705(1), Michigan courts may exercise
limited personal jurisdiction over individuals who engage in “[t]he transaction of any business
within this state,” and may “render personal judgments against the individual or his
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representative arising out of an act” that gives rise to the exercise of limited personal jurisdiction.
Weber transacted business within this state when he entered into his agreement with Kloian and
took a mortgage in Kloian’s interest as a land contract vendor. Therefore, even if the circuit
court did not have general personal jurisdiction over Weber, we conclude that the circuit court
possessed limited personal jurisdiction over Weber and was authorized to render a judgment
against him with respect to his mortgage agreement with Kloian and his interest in the property
and land contract. See MCL 600.705(1).
B. Van Fossen’s Motion for Summary Disposition
Weber next argues that he was never properly served with a copy of Van Fossen’s motion
for summary disposition and that the circuit court prematurely considered Van Fossen’s motion
for summary disposition fewer than 28 days after it was served. Again, we disagree.
1. Service of Van Fossen’s Motion
Although the amended proof of service contained in the lower court file is regular on its
face and indicates that Van Fossen’s motion for summary disposition was sent to Weber at “9416
Gold Mountain Drive, Las Vegas, NV 89134-7800” via first-class mail on April 21, 2008, Weber
argues that he never received a copy of the motion at his Nevada address. Indeed, Weber filed
an affidavit in the circuit court averring that he had never received a copy of the motion.
It is undisputed that attorneys Matecun and Davis were served with copies of Van
Fossen’s motion for summary disposition via first-class mail on April 15, 2008. But Weber
argues that service on these attorneys was insufficient to apprise him of the motion for summary
disposition because, under 2.107(B)(1)(c), “[a]fter a final judgment has been entered and the
time for an appeal of right has passed, papers must be served on the party . . . .” (Emphasis
added.) The problem with Weber’s argument in this regard is that this Court in Kloian I had
only just added him to the matter as an intervening party, specifically directing the circuit court
to allow him to be heard on remand. Therefore, at least with respect to Weber’s interests in the
litigation, it can hardly be said that “final judgment ha[d] been entered and the time for an appeal
of right ha[d] passed” within the meaning of MCL 2.107(B)(1)(c).
At any rate, even assuming arguendo that service on Matecun and Davis was somehow
insufficient, we are unpersuaded by Weber’s argument that he was not properly served in his
personal capacity. We note that a document or paper, including a motion, may be served on a
party “by mailing to the party at the address stated in the party’s pleadings,” MCR 2.107(C),11
and that “[m]ailing a copy under this rule means enclosing it in a sealed envelope with first class
postage fully prepaid, addressed to the person to be served, and depositing the envelope and its
contents in the United States mail,” MCL 2.107(C)(3). “Service by mail is complete at the time
of mailing.” Id. We accordingly reject Weber’s veiled suggestion that Van Fossen was required
11
Weber’s pleadings filed with this Court in Kloian I indicated that his address was “9416 Gold
Mountain Drive, Las Vegas, NV 89134.” Weber also testified in an earlier deposition that this
was his address of record.
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to serve his motion for summary disposition via certified or registered mail, or that Van Fossen
should have applied to the circuit court to obtain substituted service. As MCL 2.107(C)(3)
makes clear, sending a copy of a motion to a party by first-class mail at that party’s last-known
mailing address is entirely sufficient to properly effect service on that party.
We also reject Weber’s argument that he was never served with a copy of the motion at
his Nevada address. We reiterate that the amended proof of service contained in the lower court
file is regular on its face and indicates that Van Fossen’s motion for summary disposition was
sent to Weber at “9416 Gold Mountain Drive, Las Vegas, NV 89134-7800” via first-class mail
on April 21, 2008. A proof of service that is regular on its face creates a rebuttable presumption
of proper service, see Garey v Morley Bros, 234 Mich 675, 676-677; 209 NW 116 (1926), and
“[t]he quantum of evidence required . . . to overthrow proof of service regular on its face is
considerable,” Delph v Smith, 354 Mich 12, 16; 91 NW2d 854 (1958). This Court has observed
that “[t]he burden of proof to show non-service is upon the party attacking the jurisdiction of the
court” and that the “mere denial of such service by that party is insufficient.” James v James, 57
Mich App 452, 454; 225 NW2d 804 (1975). The evidence required to impeach an otherwiseregular proof of service must be unequivocal, clear, and convincing, Garey, 234 Mich at 678,
and an individual’s denial of service must be accompanied by “substantial corroboration” in
order to overcome the presumption of proper service, Alpena Nat’l Bank v Hoey, 281 Mich 307,
312-313; 274 NW 803 (1937). The bare testimony of the individual attacking the court’s
jurisdiction is generally insufficient to impeach an otherwise-regular proof of service. See
Garey, 234 Mich at 677; James, 57 Mich App at 454.
The only evidence tending to impeach the validity of the amended proof of service in the
instant case is Weber’s bare denial of service in his affidavit. Such a conclusory and
uncorroborated denial is quite simply insufficient to impeach the otherwise-regular amended
proof of service filed by Van Fossen. Id. We perceive no clear and convincing evidence
sufficient to overcome the presumption that Weber was properly served with a copy of Van
Fossen’s motion for summary disposition at his Nevada address.
2. Timeliness of the Circuit Court’s Hearing
Weber also argues that even if he was properly served with Van Fossen’s motion for
summary disposition at his Nevada address, the motion was prematurely considered fewer than
28 days after it was served, in violation of MCR 2.116(B)(2). Specifically, Weber points out that
although Van Fossen’s motion for summary disposition was allegedly served on him on April
21, 2008, the motion was heard by the circuit court on May 14, 2008, fewer than 28 days later.
MCR 2.116(B)(2) provides that a “hearing on a motion [for summary disposition]
brought by a party asserting a claim shall not take place until at least 28 days after the opposing
party was served with the pleading stating the claim.” Quite clearly, the language of MCR
2.116(B)(2) does not refer to service of the motion for summary disposition itself, but rather to
service of the original “pleading stating the claim.” The substance of Weber’s argument appears
to be that because he never received the original pleadings in this matter, Van Fossen’s motion
should not have been heard until at least 28 days after the motion was served on him.
Weber’s specific reading of the court rule does not persuade us, and we question whether
the timing requirements of MCR 2.116(B)(2) even apply in the context of an intervening party
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who has intervened long after the filing and service of the original pleadings. See Yee v
Shiawassee Co Bd of Comm’rs, 251 Mich App 379, 392; 651 NW2d 756 (2002) (observing that
MCR 2.116(B)(2) applies only to “‘plaintiffs who wish to move for immediate summary
disposition upon the filing of a complaint’”). But even assuming arguendo that the timing
requirements of MCR 2.116(B)(2) do apply in situations such as this, we conclude that Weber
was not prejudiced by the circuit court’s consideration of the motion for summary disposition on
May 14, 2008. It is well settled that procedural defects are generally subject to the harmless
error rule. See, e.g., In re Utrera, 281 Mich App 1, 14; 761 NW2d 253 (2008); Detroit v
Volunteers of America, 169 Mich App 465, 472-473; 426 NW2d 743 (1988); see also MCR
2.613(A). After reviewing the record in this case, we are satisfied that any failure to satisfy the
28-day requirement of MCR 2.116(B)(2) was harmless and not prejudicial to Weber’s interests.
Both Matecun and Davis were served with copies of the motion for summary disposition more
than 28 days before the circuit court’s hearing of May 14, 2008, and Weber was actually
represented at the hearing by attorney Tanner. Accordingly, Weber cannot now claim that he did
not have actual notice of the scheduled hearing or of the pendency of the motion. Moreover,
Weber was provided with a full opportunity to move for reconsideration following the circuit
court’s ruling on the motion for summary disposition. See Boulton v Fenton Twp, 272 Mich App
456, 463-464; 726 NW2d 733 (2006). In sum, Weber has not demonstrated that he was
prejudiced by any failure to comply with the 28-day requirement of MCR 2.116(B)(2), and we
will not presume prejudice merely from the fact that the circuit court’s hearing may have been
held fewer than 28 days after the motion was served on Weber in Nevada. We will not disturb
the circuit court’s decision solely on the basis of this alleged violation of MCR 2.116(B)(2),
which was plainly harmless if it was even error at all.
Finally, and contrary to Weber’s argument on appeal, we note that the circuit court did
comply with the timing requirements of MCR 2.116(G)(1)(a)(i), the rule that actually governs
the amount of time that must elapse between the service of a motion for summary disposition and
the circuit court’s hearing. Pursuant to MCR 2.116(G)(1)(a)(i), unless a different period is set by
the court, a motion for summary disposition “must be filed and served at least 21 days before the
time set for the hearing . . . .” In this case, it is undisputed that the circuit court’s hearing on Van
Fossen’s motion for summary disposition was held on May 14, 2008, more than 21 days after the
motion was served on Weber via first-class mail on April 21, 2008. Therefore, the circuit court
fully complied with the requirements of MCR 2.116(G)(1)(a)(i) in this case. See Yee, 251 Mich
App at 392.
C. This Court’s Previous Opinion in Kloian I
Weber argues that this Court already ruled in Kloian I that his mortgage interest was an
interest in real property, and that this is now the law of the case. He also argues that the circuit
court erred by extinguishing his mortgage interest because Van Fossen had defaulted on his
obligations under the land contract. We cannot agree with Weber’s arguments in this regard.
We first consider Weber’s argument that the Kloian I Court already determined that he
had a real estate mortgage interest in the property and that such a determination is now law of the
case. Weber’s assertion in this regard is disingenuous and clearly incorrect. A careful reading of
the opinion in Kloian I reveals that this Court reserved judgment concerning the exact nature of
Weber’s interest in the property, choosing instead to remand to the circuit court for an initial
determination of the type of interest held by Weber. It is true that this Court’s opinion in
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Kloian I states, “Additionally, Van Fossen’s argument that Weber is not a mortgagee in the real
property is frivolous because Van Fossen admitted below that Weber owned the mortgage.”
Kloian I, slip op at 14. But contrary to Weber’s assertion, this sentence was not part of the
Court’s holding. Instead, it was merely a recitation of one of the arguments that Weber had
raised in that appeal. The question whether Weber’s interest was a true real estate mortgage or
merely a security interest in Kloian’s personalty was never even considered in Kloian I.
Weber also argues that the circuit court erred by extinguishing his mortgage interest
because Van Fossen had defaulted on his obligations under the land contract. Weber is
essentially attempting to relitigate his previous assertion that because Van Fossen defaulted on
the land contract, Van Fossen’s interest in the property was no longer superior to Weber’s own
interest. But the law of the case doctrine bars this argument. This Court in Kloian I specifically
affirmed the circuit court’s ruling that Van Fossen had not defaulted on the land contract, and
had fully performed his obligations thereunder. Id. at 2-12. Under the law of the case doctrine,
“‘a ruling by an appellate court on a particular issue binds the appellate court and all lower
tribunals with respect to that issue. Thus, a question of law decided by an appellate court will
not be decided differently on remand or in a subsequent appeal in the same case.’” Sinicropi v
Mazurek, 279 Mich App 455, 465; 760 NW2d 520 (2008), quoting Ashker, 245 Mich App at 13.
Weber may not again argue that Van Fossen defaulted on his obligations under the land contract
because this issue has already been decided adversely to him in this litigation.
D. Due Process
Weber further argues that he was denied his right to due process of law when the circuit
court extinguished his mortgage interest without affording him a meaningful opportunity to
participate in the proceedings on remand. Again, we disagree. Weber did receive a meaningful
opportunity to participate in the circuit court proceedings on remand, just as this Court directed
in Kloian I. Weber was notified of both the circuit court’s status conference and the circuit
court’s motion hearing. He was served with a copy of Van Fossen’s motion for summary
disposition. So, too, were his attorneys Matecun and Davis served with copies of the motion.
Although neither Matecun nor Davis appeared for the motion hearing, another lawyer, attorney
Tanner, represented Weber there. Davis filed a written response to Van Fossen’s motion for
summary disposition, in which he could have set forth Weber’s substantive arguments but
instead chose not to do so.
Due process requires “notice reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and afford them an opportunity to present
their objections.” Mullane v Central Hanover Bank & Trust Co, 339 US 306, 314; 70 S Ct 652;
94 L Ed 865 (1950); see also Dow v Michigan, 396 Mich 192, 205-206; 240 NW2d 450 (1976).
Here, Weber and his attorneys did have sufficient notice of the pendency of Van Fossen’s motion
and the scheduled circuit court proceedings. Moreover, as demonstrated by Davis’s written
response to the motion and attorney Tanner’s presence at the motion hearing, Weber received an
ample opportunity to be heard on remand as directed by this Court in Kloian I. He simply chose,
for whatever reason, not to participate in the proceedings. A party’s decision not to exercise his
or her opportunity to be heard does not equate to a deprivation of due process. See Loyd v Loyd,
731 F2d 393, 400 (CA 7, 1984); see also In re Elizabeth T, 3 AD3d 751, 753; 770 NYS2d 804
(NY App, 2004) (observing that the court “did not deprive respondent of due process” when the
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respondent “simply chose not to participate in the process”). We perceive no error requiring
reversal in this regard.
E. Van Fossen’s Alleged Bad-Faith Conduct
Finally, Weber argues that he is entitled to appellate relief because Van Fossen has acted
in bad faith throughout this litigation. Specifically, he contends that Van Fossen has taken a
number of “inconsistent” and “contradictory” positions, both before the circuit court and this
Court. By contrast, Weber asserts that he “has always maintained the same position.”
Although Weber asserts in his brief on appeal that Van Fossen has taken a number of
“inconsistent” and “contradictory” positions, he fails to specify exactly which inconsistencies
and contradictions form the basis of his argument. Furthermore, he fails to identify the nature of
the relief to which he believes he is entitled as a result of Van Fossen’s alleged bad-faith
conduct. It is axiomatic that an appellant may not simply announce his position or assert an error
and then leave it up to this Court to discover and rationalize the basis for his claims. Mudge v
Macomb Co, 458 Mich 87, 105; 580 NW2d 845 (1998). Nor may he leave it to this Court to
unravel his arguments and then search for authority to sustain or reject his position. Id. Weber’s
cursory briefing of this argument without proper citation to supporting authority constitutes
abandonment of the issue on appeal. Peterson Novelties, Inc v Berkley, 259 Mich App 1, 14; 672
NW2d 351 (2003).
At any rate, as we understand his terse argument, Weber is essentially arguing that Van
Fossen has acted with unclean hands. Whatever truth there may be in Weber’s assertions
concerning Van Fossen, we note that Weber, himself, has also taken “inconsistent” and
“contradictory” positions in this litigation. Most notably, although Weber specifically asked this
Court in Kloian I to permit him to intervene in the circuit court, he now argues that he was never
made a party to the circuit court proceedings and that the circuit court lacked jurisdiction over
him on remand. Further, even though it is clear that Weber had actual notice of Van Fossen’s
motion for summary disposition and the scheduled motion hearing, he disingenuously contends
that he was completely unaware of the pending motion following remand to the circuit court. It
is well settled that a party who seeks equitable relief must do so with clean hands. McCluskey v
Winisky, 373 Mich 315, 321; 129 NW2d 400 (1964); Berar Enterprises, Inc v Harmon, 101
Mich App 216, 231; 300 NW2d 519 (1980). A party with unclean hands may not defend on the
ground that the other party has unclean hands as well. To permit a party with unclean hands to
defend on such a ground would contravene the ancient rule that “[h]e who hath committed
iniquity shall not have equity.” Society of Good Neighbors v Van Antwerp, 324 Mich 22, 28; 36
NW2d 308 (1949); see also McCredie v Buxton, 31 Mich 383, 388 (1875). Weber is entitled to
no relief on this ground.
IV. Kloian’s Cross Appeal
On cross appeal, Kloian raises several claims of error as well. Kloian argues that the
circuit court erred by granting Van Fossen’s motion for summary disposition and that, at a
minimum, the motion for summary disposition was prematurely decided. He also argues that the
circuit court denied him due process of law by refusing to allow him to participate in the March
2008 status conference and the motion hearing of May 14, 2008. Lastly, Kloian asserts that Van
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Fossen has “continued [a] pattern of advancing ‘frivolous’ legal arguments” and that this matter
should be remanded to a different circuit judge. We address these arguments seriatim.
A. Van Fossen’s Motion for Summary Disposition
Kloian argues that the circuit court prematurely considered Van Fossen’s motion for
summary disposition, that he was “severely prejudiced” by this premature consideration because
it left him insufficient time to find a new lawyer, and that because there were no “pleadings” the
circuit court was without authority to grant summary disposition. He also argues that the circuit
court erred as a matter of law by determining that Weber’s mortgage interest was not an interest
in real estate. We agree in part and disagree in part. Nonetheless, we find that Kloian is entitled
to no relief because the circuit court reached the correct result, albeit for the wrong reason.
1. Timeliness of the Circuit Court’s Hearing and Possible Prejudice
Like Weber, Kloian also contends that Van Fossen’s motion for summary disposition was
prematurely considered by the circuit court. Kloian points out that although Van Fossen’s
motion for summary disposition was served on him on April 15, 2008, the circuit court
considered the motion on May 14, 2008. Kloian complains that he was prejudiced by the circuit
court’s consideration of the motion on May 14, 2008, because it did not afford him “adequate
time . . . to find new trial court counsel.”
For the reasons stated previously, we question whether the 28-day requirement of MCR
2.116(B)(2) would even apply in this context. But even assuming arguendo that the rule would
apply here, we conclude that it was fully satisfied with respect to Kloian. Unlike Weber, who
was served with Van Fossen’s motion for summary disposition on April 21, 2008, Kloian and his
former attorney were served six days earlier, on April 15, 2008. Accordingly, the circuit court’s
hearing on May 14, 2008, occurred “at least 28 days” after Kloian was served. MCR
2.116(B)(2). Moreover, despite Kloian’s assertion to the contrary, the circuit court did comply
with the timing requirements of MCR 2.116(G)(1)(a)(i) in this case. It is beyond dispute that the
circuit court’s hearing on Van Fossen’s motion for summary disposition was held more than 21
days after the motion was served on Kloian. MCR 2.116(G)(1)(a)(i).
Kloian also argues that he was “severely prejudiced” by the circuit court’s consideration
of Van Fossen’s motion for summary disposition on May 14, 2008, because the timing of the
court’s hearing did not leave him enough time to locate new counsel. However, Kloian does not
explain how the one-month period between April 15, 2008, and May 14, 2008, was not sufficient
time to find a new lawyer. We note that Kloian has been represented by many different attorneys
throughout the pendency of this litigation, and has had no apparent difficulty in hiring or
retaining counsel in the past. As Kloian has provided no examples of how he was prejudiced or
why the one-month period was insufficient in this instance, he is entitled to no appellate relief.
We will not presume prejudice in the absence of specific evidence that Kloian was actually
harmed.
Lastly, relying on MCR 2.116(G)(5), Kloian claims that because there were no
“pleadings” the circuit court was without authority to grant Van Fossen’s motion for summary
disposition. But Kloian’s bald assertion in this regard is entirely devoid of supporting argument.
Moreover, this assertion of error was not included in Kloian’s statement of the questions
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presented, in violation of MCR 7.212(C)(5). Accordingly, the matter is not properly before us,
and we decline to consider it further. Ypsilanti Fire Marshal v Kircher (On Reconsideration),
273 Mich App 496, 553; 730 NW2d 481 (2007); Caldwell v Chapman, 240 Mich App 124, 132;
610 NW2d 264 (2000).12
2. The Nature of Weber’s Interest
As noted earlier, the circuit court found that because Kloian’s land contract vendor’s
interest was an interest in personalty, Weber took only a security interest in Kloian’s personalty
rather than a true mortgage interest in the real property. In Michigan, mortgages of land contract
vendor’s interests and land contract vendee’s interests are now governed by the comprehensive
land contract mortgage act, MCL 565.356 et seq. See Graves v American Acceptance Mortgage
Corp, 469 Mich 608, 616 n 6; 677 NW2d 829 (2004). However, the land contract mortgage act
was not enacted until 1998, see 1998 PA 106, and therefore does not apply to the mortgage
agreement between Kloian and Weber in this case, which was executed in January 1997.13
Instead, the mortgage agreement between Kloian and Weber must be evaluated under the
common law of land contracts and mortgages. It is to this common law that we now turn to
evaluate the propriety of the circuit court’s ruling.
As this Court observed in Pittsfield Charter Twp v Saline, 103 Mich App 99, 103; 302
NW2d 608 (1981) (citation omitted):
“A contract for the sale of land operates as an equitable conversion; the
vendee’s interest under the contract becomes realty and the vendor’s interest
under the contract constitutes personalty. In equity the purchaser is regarded as
the owner subject to liability for the unpaid price and the vendor as holding the
legal title in trust for him from the time a valid agreement for the purchase of land
is entered into. . . . Thus, as a vendee makes payments on a land contract the
vendor becomes trustee for him of the legal estate, and he becomes in equity the
owner of the land to the extent of payments made. A contract for the sale of land,
part of the purchase price being paid and possession taken, vests in the vendee an
12
Nor is Kloian’s cursory assertion concerning service on his guardian ad litem contained in his
statement of the questions presented. We therefore decline to address it. MCR 7.212(C)(5);
Ypsilanti Fire Marshal, 273 Mich App at 553.
13
The general rule in this state is that “‘statutes are presumed to operate prospectively unless the
contrary intent is clearly manifested.’” Frank W Lynch & Co v Flex Technologies, Inc, 463
Mich 578, 583; 624 NW2d 180 (2001) (citation omitted); see also Detroit Trust Co v Detroit,
269 Mich 81, 84-85; 256 NW 811 (1934). We perceive nothing in the text of the land contract
mortgage act to indicate that the Legislature intended the act to apply retroactively. See People
v Nuss, 405 Mich 437, 450; 276 NW2d 448 (1979). But we also reject Kloian’s suggestion that
the circuit court impermissibly gave retroactive effect to the land contract mortgage act. The
circuit court never even mentioned the land contract mortgage act, and it is clear from the record
that the act played no part in the circuit court’s ruling.
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equitable title in fee. The vendor is a trustee of the legal title for the vendee to the
extent of his payment.”
Accordingly, under the doctrine of equitable conversion, the vendor’s interest in a land contract
is generally considered to be personalty from the time the land contract is executed. Brooks v
Gillow, 352 Mich 189, 193; 89 NW2d 457 (1958); In re Handelsman, 266 Mich App 433, 440;
702 NW2d 641 (2005).
However, the doctrine of equitable conversion—a legal fiction—is not an absolute rule.
See Brooks, 352 Mich at 193-195. For example, the doctrine of equitable conversion will not be
applied when it would work a fraud, id. at 193, when it would defeat the true intentions of the
parties, Detroit & Security Trust Co v Kramer, 247 Mich 468, 471; 226 NW 234 (1929), or when
it would “accomplish a decidedly inequitable result,” Union Guardian Trust Co v Rood, 261
Mich 188, 192; 246 NW 74 (1933). Our Supreme Court has noted that “[c]ourts should not
adopt the doctrine of equitable conversion or any other equitable or legal fiction where doing so
would unsettle or render uncertain valuable property rights.” Id. at 193.
Thus, notwithstanding the doctrine of equitable conversion, the vendor’s interest in a land
contract was clearly mortgageable at common law. Union Guardian Trust Co v Rood (On
Rehearing), 265 Mich 354, 354-355; 251 NW 309 (1933); see also Kramer, 247 Mich at 472
(noting that if the vendors of real property had granted a mortgage after execution of the
contract, “it would hardly be contended that it was a chattel mortgage, because it covered only
the interest of the vendors which had become personal property under the doctrine of equitable
conversion”). Moreover, the general common-law rule was that the land contract vendor’s
mortgagee held his security interest in realty rather than in personalty, and that his mortgage was
therefore “foreclose[able] as a real estate mortgage rather than as a chattel mortgage.” Rood, 265
Mich at 355; see also Nelson & Whitman, Real Estate Finance Law (4th ed), § 3.37, pp 115-116.
Based on this authority, we must conclude that the circuit court erred by ruling as a
matter of law that Weber took only a mortgage in Kloian’s personalty and could not have taken a
mortgage in the real property. As shown by the mortgage documents executed in this case, it
was clearly the parties’ intent that Weber would take a mortgage in the real property rather than
merely in Kloian’s personalty. We conclude that Weber held his mortgage in the real property,
and that his mortgage was therefore “foreclose[able] as a real estate mortgage rather than as a
chattel mortgage.” Rood, 265 Mich at 355. It was error for the circuit court to apply the doctrine
of equitable conversion to defeat the parties’ true intentions. See Kramer, 247 Mich at 471.
Nevertheless, we conclude that the circuit court reached the correct result in this case,
albeit for an incorrect reason. Although a mortgage given by a land contract vendor has
historically been considered an interest in the real estate, Nelson & Whitman, Real Estate
Finance Law (4th ed), § 3.37, pp 115-116, the majority rule at common law was that such a
mortgage encumbered the land only to the extent of the vendee’s remaining indebtedness for the
unpaid portion of the purchase price, 92A CJS, Vendor & Purchaser, § 470, p 57 (stating that
“[a]n assignment by the vendor of a contract for the sale of land, for security, vests in the
assignee a lien on the vendor’s interest in the property to the extent of the debt secured, not
exceeding the purchase money unpaid on the contract”); see also Flyge v Flynn, 63 Nev 201,
225-226; 166 P2d 539 (1946), and Marion Mortgage Co v Grennan, 106 Fla 913, 925; 143 So
761 (1932). In light of this authority, it necessarily follows that once the vendee has paid off the
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entire purchase price remaining due under the land contract, the vendee is entitled to receive a
deed from the vendor free of the mortgage, and the mortgage held by the vendor’s mortgagee is
extinguished. See In re Vandenbosch, 405 BR 253, 263 (Bkrtcy WD Mich, 2009) (noting that
“once all payments under the contract have been made, and all that is left for the vendor to do
under the [land] contract is to convey legal title to the purchaser, any rationale for permitting a
lien to attach to the vendor’s interest no longer exists”); Wyllie v Von Ruden, 76 Or App 598,
602; 711 P2d 137 (1985) (observing, in the context of a judgment lien rather than a mortgage,
that upon the land contract vendees’ payment of the full purchase price to the land contract
vendor, the “judgment lien on the vendor’s interest in th[e] property was extinguished”).
As explained earlier, the circuit court previously determined that Kloian owed Van
Fossen $2,173,361.97, but that Kloian was entitled to a setoff in the amount of $494,946.32,
which represented the total amount that remained due and owing on the land contract. After
deducting this remaining amount due under the original land contract from the total amount due
to Van Fossen, the court determined that Van Fossen had “satisfied all obligations under the
Land Contract,” and transferred the property to Van Fossen “free and clear.” Thereafter, this
Court affirmed the circuit court’s ruling that Van Fossen had satisfied all remaining obligations
under the land contract in Kloian I. In other words, because Van Fossen had satisfied the
remaining amount due under the original land contract in full, there was no longer any remaining
indebtedness on the original purchase price. See 92A CJS, Vendor & Purchaser, § 470, p 57.
Thus, Van Fossen was entitled to receive legal title from Kloian, and Weber’s mortgage on
Kloian’s land contract vendor’s interest was extinguished.
In sum, although the circuit court did so for incorrect reasons, it reached the correct result
when it determined that Weber held no mortgage interest in the real estate. It is axiomatic that
this Court will not reverse when the circuit court has reached the correct result, even if it has
done so for the wrong reason. Netter v Bowman, 272 Mich App 289, 308; 725 NW2d 353
(2006); Taylor v Laban, 241 Mich App 449, 458; 616 NW2d 229 (2000).14
B. Due Process
Kloian next argues that the circuit court denied him due process of law by refusing to
allow him to participate in the March 2008 status conference and the motion hearing of May 14,
2008. The court reasoned that because Kloian’s interests had been fully and finally decided in
that portion of the previous circuit court judgment that was affirmed on appeal in Kloian I, there
was no need to allow Kloian to be heard on remand.
14
Like Weber, Kloian also argues that this Court already ruled in Kloian I that Weber’s
mortgage interest was an interest in real estate rather than an interest in personalty. We reject
Kloian’s argument in this regard for the reasons stated above in Part III(C). When the Kloian I
Court stated that “Van Fossen’s argument that Weber is not a mortgagee in the real property is
frivolous,” the Court was merely summarizing one of Weber’s arguments on appeal. The
question whether Weber’s interest was a true real estate mortgage was never even considered in
Kloian I.
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It is true that all of Kloian’s direct arguments had been previously considered and
decided. However, it strikes us that Kloian should have been permitted to participate in the
proceedings on remand, at least to some degree. As noted earlier, due process requires “notice
reasonably calculated, under all the circumstances, to apprise interested parties of the pendency
of the action and afford them an opportunity to present their objections.” Mullane, 339 US at
314; see also Dow, 396 Mich at 205-206. Indeed, the final determination of the nature of
Weber’s mortgage interest was surely a question in which Kloian was at least minimally
interested. After all, any determination that Weber’s interest was not a real estate mortgage
could have financially impacted Kloian by shutting off Weber’s recourse against the real
property and potentially leaving Kloian personally responsible on the note.
However, we conclude that any error committed by the circuit court in this regard was
not prejudicial and did not affect the outcome. To obtain relief on a procedural due process
claim, an individual must generally show that some material prejudice has resulted from the
alleged violation. See Dep’t of Transportation v Brown, 153 Mich App 773, 784; 396 NW2d
529 (1986). The determination of the nature of Weber’s interest essentially presented a question
of law for the court, and although it turns out that the circuit court incorrectly analyzed this
question of law, any factual arguments made by Kloian would have been largely irrelevant on
this issue. As noted above, the common-law rule is that a land contract vendor’s mortgagee
holds his mortgage interest in realty rather than in personalty, and that his mortgage is
“foreclose[able] as a real estate mortgage rather than as a chattel mortgage.” Rood, 265 Mich at
355. Kloian could not have presented any arguments or offered any evidence that would have
negated or altered the effect of this rule in the present case. For these reasons, he cannot show
that he was prejudiced by the circuit court’s refusal to allow him to participate in the status
conference and motion hearing. Moreover, particularly in light of our agreement with Kloian
that Weber held his mortgage interest in realty rather than in personalty, it cannot be disputed
that the circuit court’s refusal to allow Kloian’s participation has not affected the outcome of this
case. It is well settled that we will not reverse on the basis of error that was not decisive to the
outcome. Ypsilanti Fire Marshal, 273 Mich App at 529.
C. Van Fossen’s Allegedly “Frivolous” Arguments
Kloian also implies that he is somehow entitled to appellate relief because Van Fossen
has allegedly “continued [a] pattern of advancing ‘frivolous’ legal arguments” throughout this
litigation. In fact, he claims that the Kloian I Court already labeled “Van Fossen and his
attorney’s legal arguments ‘frivolous.’” Nothing could be further from the truth. Contrary to
Kloian’s suggestion, this Court has never characterized Van Fossen’s arguments as “frivolous.”
We acknowledge that the opinion in Kloian I contained language stating that “Van Fossen’s
argument that Weber is not a mortgagee in the real property is frivolous . . . .” But Kloian is
reading this phrase entirely out of context. As explained above, the Kloian I Court was merely
summarizing one of Weber’s arguments. It certainly was not passing judgment on the quality or
nature of Van Fossen’s arguments. Beyond this, Kloian does not specify which of Van Fossen’s
arguments were “frivolous” or why his allegations in this regard should entitle him to any
appellate relief. Kloian may not simply announce his position and leave it to this Court to
discover and rationalize the basis for his claim of error. Mudge, 458 Mich at 105. This issue has
been abandoned. Peterson Novelties, 259 Mich App at 14.
D. Remand to a Different Circuit Judge
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Because we affirm the circuit court in all respects, it is unnecessary to consider Kloian’s
argument that this matter should be remanded to a different circuit judge.
V. Conclusion
Although the circuit court relied on incorrect reasoning, it reached the correct result by
granting Van Fossen’s motion for summary disposition and determining that Weber held no
mortgage interest in the real property.
In light of our conclusions above, we need not consider the remaining arguments raised
by the parties on appeal.
Affirmed. As the prevailing party, Van Fossen may tax costs pursuant to MCR 7.219.
/s/ William B. Murphy
/s/ Kathleen Jansen
/s/ Brian K. Zahra
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