JOHNSON FAMILY LTD PARTNERSHIP V WHITE PINE WIRELESS LLCAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
JOHNSON FAMILY LIMITED PARTNERSHIP,
WHITE PINE WIRELESS, LLC, d/b/a CELLERE,
October 30, 2008
Grand Traverse Circuit Court
LC No. 06-025433-CK
Advance Sheets Version
JOHNSON FAMILY LIMITED PARTNERSHIP,
WHITE PINE WIRELESS, LLC, d/b/a CELLERE,
Before: O’Connell, P.J., and Bandstra and Gleicher, JJ.
Grand Traverse Circuit Court
LC No. 06-025433-CK
In this suit to reform a deed and enforce restrictions, defendants J.P.M.S., Inc. (JPMS),
and White Pine Wireless, LLC (White Pine), appeal as of right the trial court’s grant of summary
disposition in favor of plaintiff, Johnson Family Limited Partnership (the Partnership). On
appeal, the primary issues are whether the trial court could properly reform an unambiguous
deed to include omitted deed restrictions notwithstanding the doctrine of merger, whether the
facts supported reformation of the deed at issue on the basis of mutual or unilateral mistake, and,
if the trial court properly reformed the deed, whether White Pine’s construction of a cell tower
violated the restrictions. We conclude that the trial court properly reformed the deed to include
the omitted restrictions, but that there was insufficient record evidence to support the conclusion
that the cell tower constitutes wires or conduits within the meaning of the restrictions. For that
reason, we affirm in part, reverse in part, and remand for further proceedings.
I. Basic Facts and Procedural History
In approximately 2000, JPMS began negotiations to purchase a parcel of real property
owned by the Partnership. At the time, the Johnson Family Trust (the Trust) served as the
general partner for the Partnership. In September 2000, the Trust entered into a purchase
agreement to sell the property to JPMS. The Trust did not indicate whether it was signing on
behalf of the Partnership.
The agreement provided that “[t]he Deed to be executed in conveyance of the Subject
property shall contain” certain specified building and use restrictions that would be applicable
“until Seller shall cease to own the property commonly known as Acme Village.” Among the
restrictions were the following:
(j) No exterior lighting shall be installed on the property, which shall shine
upon the street or any adjoining property without the approval of the Seller or his
successor. No power, telephone or other utility wires or conduits shall be
installed above ground on the property other than the currently existing power
(k) No statue, fence or other unnatural improvements shall be permitted on
the Property without the approval of his [sic] Seller or successor.
Corporate Title Agency handled the closing, which occurred on December 13, 2000, with
neither party in attendance. Jerome Jelinek, who is the president of Corporate Title Agency and
an attorney, prepared the warranty deed for the closing. However, Jelinek did not include the
restrictions on the deed. The warranty deed was recorded on December 29, 2000. After the
closing, a hotel was built on the property. JPMS later leased the hotel to American Hospitality
Management, which operates a Holiday Inn Express at the site.
On February 28, 2006, JPMS granted an option to lease a portion of the property at issue
to White Pine. The option had a term of one year and could be exercised by paying $550 to
JPMS. In March 2006, White Pine applied for a special use permit to construct a cell tower on
the property. As a result of this application, the Partnership became aware of White Pine’s plan
to build a cell tower on the property the Partnership sold to JPMS. Shortly thereafter, the
Partnership also learned its deed to JPMS did not contain the restrictions described in the
purchase agreement. After the Partnership contacted the title company about the discrepancy in
the deed, Jelinek prepared an affidavit listing the restrictions and indicating that the restrictions
had been omitted from the deed. He also indicated that the affidavit was intended to correct the
warranty deed to reflect the parties’ intent. The affidavit was recorded on June 28, 2006.
In July 2006, the Partnership contacted the township regarding its belief that the land in
question was subject to restrictions. After the township forwarded the Partnership’s letter to
White Pine, White Pine acknowledged the claims in a letter to the township dated July 21, 2006.
On August 1, 2006, the township approved the special use permit.
On September 6, 2006, the Partnership sued White Pine for declaratory and injunctive
relief. On December 7, 2006, the Partnership amended its complaint to join JPMS. In the
amended complaint, the Partnership asked the trial court to reform the deed so that a mutual
mistake regarding the non-inclusion of the restrictions listed in the purchase agreement could be
corrected, to declare that the restrictions properly apply to White Pine because White Pine had
notice of the claimed restrictions before it exercised its option to lease, and to enjoin the
construction of the cell tower.
On October 23, 2006, White Pine assigned its option to lease to SBA Towers, Inc. And,
by December 13, 2006, SBA completed the construction of the cell tower and a fence around it.
On February 12, 2007, White Pine moved for summary disposition. White Pine argued
that the restrictions did not apply to the property because they were not part of the recorded deed,
which must be enforced as written, and that consideration of any previous negotiations or
agreements was barred under the doctrine of merger. It further argued that JPMS never intended
to create deed restrictions on the property. It also contended that it was a bona fide purchaser for
value and, therefore, not bound by unrecorded deed restrictions. White Pine also argued that,
even if the deed restrictions were to apply, the cell tower did not violate any of the deed
restrictions. Finally, White Pine argued that it would be inequitable for the trial court to enforce
the deed restrictions against it under the circumstances.
On March 8, 2007, the Partnership also moved for summary disposition. It argued that
there was no dispute that the parties had intended the restrictions to apply to the property and that
the deed did not reflect that intent. Thus, the Partnership contended, it was entitled to a
reformation of the deed to include the restrictions. The Partnership also argued that White Pine
did not obtain an interest in the property until after White Pine exercised the lease option.
Because White Pine had notice of the claimed restrictions by the time it exercised the lease
option, the Partnership further argued that White Pine could not avoid application of the
restrictions as a bona fide purchaser for value. On the basis of these arguments, the Partnership
asked the trial court to grant the requested relief.
On March 16, 2007, JPMS responded to the Partnership’s motion for summary
disposition. JPMS argued that the omission of the restrictions was not the result of mutual
mistake. JPMS supported this contention with an affidavit by the president of JPMS, Donald R.
Schappacher. In the affidavit, Schappacher stated that his attorneys had expressed concerns over
the restrictions contained in the purchase agreement, which, they indicated, should be resolved
before closing. Schappacher further averred that JPMS’s attorneys were delegated the task of
reviewing the deed and, when the deed arrived with no restrictions, the attorneys approved the
deed with the understanding that the deed was not subject to the restrictions. JPMS also agued
that the doctrine of laches applied to the facts of the case and should preclude equitable relief.
For these reasons, JPMS asked the trial court to deny the Partnership’s motion and grant
summary disposition in JPMS’s favor under MCR 2.116(I)(2).
On May 7, 2007, the trial court issued its opinion and order. The trial court concluded
that the Partnership was entitled to reformation of the deed to include the restrictions under the
undisputed facts of the case. The trial court also rejected the contentions that the merger doctrine
barred reformation and that White Pine was a bona fide purchaser. Finally, the trial court
concluded that the cell tower constituted a utility conduit and, therefore, violated the use
restrictions. For these reasons, the trial court granted the Partnership’s motion for summary
disposition and denied White Pine’s motion for summary disposition. On May 31, 2007, the trial
court entered a judgment reforming the deed to include the restrictions, enjoining the
construction of a cell tower and fence, and ordering the removal of the existing cell tower and
White Pine and JPMS appealed separately. The appeals were consolidated.
II. The Equitable Power to Reform a Deed
White Pine first argues that the deed at issue was not ambiguous and did not contain any
restrictions. Therefore, the trial court did not have the authority to reform it to include
restrictions and should have enforced the deed as written.
A. Standard of Review
This Court reviews de novo decisions on motions for summary disposition. State Farm
Fire & Cas Co v Corby Energy Services, Inc, 271 Mich App 480, 482; 722 NW2d 906 (2006).
Whether a grant of equitable relief is proper under a given set of facts is a question of law that
this Court also reviews de novo. McDonald v Farm Bureau Ins Co, 480 Mich 191, 197; 747
NW2d 811 (2008).
B. The Power to Reform an Unambiguous Deed
Michigan courts sitting in equity have long had the power to reform an instrument that
does not express the true intent of the parties as a result of fraud, mistake, accident, or surprise.
See Scott v Grow, 301 Mich 226, 238-239; 3 NW2d 254 (1942); see also Potter v Chamberlin,
344 Mich 399, 407; 73 NW2d 844 (1955) (noting that the “power of a court of equity to grant
relief by way of reformation of a conveyance of property, or other instrument in writing, on the
ground of mutual mistake is not open to question”). And our Supreme Court has never limited
the equitable power to reform an instrument to only those cases involving ambiguous deeds.
Indeed, our Supreme Court has specifically held that the equitable power to reform may be
applied to unambiguous agreements. See Urick v Burge, 350 Mich 165; 86 NW2d 543 (1957).
In Urick, the plaintiff sued for specific performance of an option to purchase land that the
plaintiff had leased from the defendant. Id. at 166. The defendant presented evidence that,
despite the language actually used in the lease, the parties had intended to provide the plaintiff
with a first opportunity to purchase the property at the end of the 10-year lease, should the
defendant wish to sell it. Id. at 167-168. On the basis of the parties’ testimony, the trial court
concluded that the parties intended the option—whether an absolute option or one subject to the
defendant’s decision to sell—to be exercised at the end of the 10-year lease. Id. at 168. For that
reason, the trial court concluded that the plaintiff’s suit filed before the end of the lease was
premature and dismissed it. Id. The plaintiff then appealed to our Supreme Court.
On appeal, the plaintiff contended that the trial court erred in “making a contract for the
parties contrary to the clear and definite terms of the lease,” id. at 166, especially considering
that both parties had read it, id. at 174. But our Supreme Court rejected the notion that the lease
had to be enforced as written on that basis: “If reading a written instrument (which both parties
thereto admit did not express their intention) precludes reformation thereof on the ground of
mutual mistake, then we wipe out hundreds of years of equity and elevate the scrivener to the
ermine.” Id. The Court acknowledged that a strictly formal system of law “‘“knows no contrast
between the will and the utterance, and no possibility of a contradiction between the two,”’” id.
(citations omitted), but rejected this system as “primitive”:
We do not dispute the seductive simplicities of this doctrine. At one
stroke we remove from the law all the vexing and confounding questions about
what goes on in the mind of man. Who cares? There stands the scroll.
But it has never been doubted, from the very beginnings of what we know
as equity, that the chancellor does indeed concern himself with the intent of
people. Specifically, as to the situation confronting us, that he will amend an
instrument to represent the actual agreement of the parties, regardless of the
content of the parchment. [Id. at 174-175 (emphasis added).]
Hence, the “general rule is that courts will follow the plain language in a deed in which there is
no ambiguity.” Farabaugh v Rhode, 305 Mich 234, 240; 9 NW2d 562 (1943). But if “the deeds
fail to express the obvious intention of the parties, the courts will try to arrive at the intention of
the parties . . . .” Id. Consequently, the trial court could properly reform the deed at issue—even
though it was not ambiguous—if the Partnership established the necessary grounds for relief.
III. The Jelinek Affidavit
White Pine next contends that, because Jelinek’s affidavit was improperly recorded, the
trial court could not properly consider it when determining whether to grant summary
disposition. However, even if we were to conclude that the affidavit was not properly recorded,
see MCL 565.451a, White Pine failed to cite any authority for the proposition that a trial court
may not consider an improperly recorded affidavit in deciding a motion for summary disposition.
Furthermore, White Pine did not state how this error prejudiced it in the trial court. Because this
issue was not properly briefed on appeal, White Pine has abandoned any claim of error in that
regard. See Hamade v Sunoco, Inc (R&M), 271 Mich App 145, 173; 721 NW2d 233 (2006).
IV. The Merger Doctrine and the Power to Reform a Deed
On appeal, both White Pine and JPMS argue that the prior negotiations and the purchase
agreement were merged into the deed. Because the prior negotiations and agreement were
merged into the deed, they further contend, the trial court erred when it reformed the deed on the
basis of the prior negotiations and agreement between the parties.
A. Standard of Review
Whether the merger doctrine applied to preclude the trial court from considering the
parties’ prior negotiations and agreement is a question of law. See Goodspeed v Nichols, 231
Mich 308, 315-316; 204 NW 122 (1925); Greenspan v Rehberg, 56 Mich App 310, 320; 224
NW2d 67 (1974). This Court reviews questions of law de novo. Gen Motors Corp v Dep’t of
Treasury, 466 Mich 231, 236; 644 NW2d 734 (2002).
B. The Merger Doctrine
Under the merger doctrine, “a deed made in full execution of a contract for the sale of
land is presumed to merge the provisions of a preceding contract pursuant to which it is made,
including all prior negotiations and agreements leading up to execution of the deed . . . .”
Goodspeed, supra at 316. But this rule is not absolute. For example, Michigan courts have long
recognized that, where delivery of the deed represents only partial performance of the preceding
contract, the unperformed portions are not merged into it. Id.; see also Chapdelaine v Sochocki,
247 Mich App 167, 171; 635 NW2d 339 (2001). Similarly, the equitable power to reform a deed
is an exception to application of the merger doctrine. As already noted, Michigan courts have
long upheld the equitable power to reform a deed on the basis of a mutual mistake or a unilateral
mistake coupled with inequitable conduct or fraud. See Scott, supra at 238-239. In most, if not
all, cases, the actual intent of the parties to a deed can be discerned only from evidence
concerning the prior negotiations and agreements of the parties along with evidence that the deed
did not accurately reflect that intent. And our Supreme Court has recognized that, where the
proofs warrant it, a court sitting in equity might reform a deed notwithstanding the doctrine of
merger. See Clifton v Jackson Iron Co, 74 Mich 183; 41 NW 891 (1889), partially overruled on
other grounds Blough v Steffens, 349 Mich 365 (1957); see also Parsons v Detroit & M R Co,
122 Mich 462; 81 NW 343 (1899) (noting that, absent evidence of mistake or fraud, a deed
would control over a previous contract).
In Clifton, supra at 184, the defendant sold land containing standing timber to the
plaintiff. The agreement to sell included a provision reserving to the defendant the right to cut
the timber within 10 years of the agreement. Id. The defendant then conveyed the land to the
plaintiff by a warranty deed that did not contain the reservation. Id. at 184-185. Eight years
later, the defendant entered the land and cut the timber, after which the plaintiff sued for trespass.
Id. at 184. In considering the evidence, our Supreme Court noted that it was within the
defendant’s power to relinquish the reservation, and, on the basis of the evidence, held that the
deed must control over the reservation contained in the agreement to sell. Id. at 185. However,
the Court also noted: “We do not hold that if the deed were so made by some mistake within the
cognizance of equity the mistake might not be corrected.” Id. The Court explained that it did
not need to consider the issue of mistake because there was “no testimony tending to show that
the deed was not supposed and intended to close up all the rights of the parties.” Id.
Furthermore, although no modern Michigan cases have specifically stated that the
doctrine of merger does not preclude a court from examining prior negotiations and agreements
when exercising its equitable power to reform a deed, in practice courts have done just that. See,
e.g., Potter, supra at 407-408 (permitting reformation of a deed in part on the basis of evidence
concerning prior negotiations and agreements); Bush v Merriman, 87 Mich 260; 49 NW 567
(1891) (examining evidence of prior negotiations to conclude that a seller could seek reformation
of a deed purporting to grant more land than the parties understood would be the subject of the
deal). Likewise, other states’ courts have explicitly recognized the equitable power to reform a
deed as an exception to the rule that prior negotiations and agreements are merged into a deed.
See Czarobski v Lata, 227 Ill 2d 364, 371-373; 882 NE2d 536 (2008) (holding that mutual
mistake is an exception to application of the merger doctrine and listing jurisdictions that have
held the same); Panos v Olsen & Assoc Constr, Inc, 2005 Utah App 446, ¶ 14; 123 P3d 816
(2005) (stating that Utah recognizes four exceptions to application of the merger doctrine
including “‘mutual mistake in the drafting of the final documents’”) (citation omitted);
Providence Square Ass’n, Inc v Biancardi, 507 So 2d 1366, 1371 (Fla, 1987) (stating that the
doctrine of merger “is inapplicable in an action seeking the equitable remedy of reformation”).
On the basis of these authorities, we conclude that the merger doctrine does not prevent a court
from exercising its equitable power to reform a deed. Therefore, the trial court could properly
consider the parties’ prior negotiations and agreement when determining whether the deed
accurately reflected the intent of the parties.
V. The Relevancy of the Purchase Agreement
As part of its argument on merger, White Pine also contends that the purchase agreement
was not relevant to establish the intent of the parties because the agreement was not between the
Partnership and JPMS. However, White Pine did not raise this argument in the trial court. Our
Supreme Court recently reiterated that, in a civil case, the failure to properly raise an issue in the
trial court generally constitutes a waiver of that issue on appeal. Walters v Nadell, 481 Mich
377, 387-388; 751 NW2d 431 (2008). Although White Pine waived this issue, this Court may
overlook the preservation requirements “if the failure to consider the issue would result in
manifest injustice, if consideration is necessary for a proper determination of the case, or if the
issue involves a question of law and the facts necessary for its resolution have been presented.”
Smith v Foerster-Bolser Constr, Inc, 269 Mich App 424, 427; 711 NW2d 421 (2006).
This issue involves sorting out the relationships between the Trust, the Partnership, and
the individual members of the Trust and the Partnership, as well as the capacities in which these
entities acted. The trial court never had the opportunity to sort out these issues. Further, by
failing to properly raise this issue in the trial court, White Pine denied the Partnership the
opportunity to elicit testimony and present documentary evidence concerning the relationship
between these parties. Finally, despite the nature of the relationships, it is clear that JPMS
primarily dealt with Lanny L. Johnson, who acted as the agent for the Trust and the Partnership.
Hence, by whatever relationship and capacity Johnson may have appeared, JPMS must have
negotiated with the understanding that the purchase agreement applied to the transfer of the
Partnership land at issue. Consequently, under these facts, we decline to further consider this
VI. Evidence in Support of Mutual or Unilateral Mistake
Both White Pine and JPMS argue that there was insufficient evidence to support
reformation of the deed on the basis of a mutual or unilateral mistake. For that reason, they
further argue, the trial court erred when it granted summary disposition in favor of the
Partnership and reformed the deed on the basis of mutual mistake or unilateral mistake.
A. Standard of Review
This Court reviews de novo whether a trial court properly granted summary disposition.
State Farm Fire & Cas Co, supra at 482. When reviewing a motion for summary disposition,
this Court examines the evidence submitted by the parties in the light most favorable to the party
opposing the motion. Moore v Cregeur, 266 Mich App 515, 517; 702 NW2d 648 (2005).
B. Distinct Entities and Merger
As a preliminary matter, we note that White Pine in part relies on its contention that the
purchase agreement was not between JPMS and the Partnership and, for that reason, cannot
constitute evidence of the parties’ intent. As already noted earlier, this issue was not properly
raised in the trial court, and we decline to consider it. Walters, supra at 387-388. Likewise,
White Pine again argues with respect to this issue that the purchase agreement should be
disregarded because the closing documents contain merger clauses. However, for the same
reasons we stated earlier, we reject the contention that the doctrine of merger bars application of
the equitable power to reform deeds or otherwise consider prior negotiations and agreements.
Therefore, we shall limit our analysis of this issue to whether the trial court properly concluded
that, under the undisputed facts of the case, the Partnership was entitled to have the deed
reformed to include the restrictions.
C. The Power to Reform on the Basis of Mutual and Unilateral Mistakes
A deed may be reformed because of the mutual mistake of the parties. Potter, supra at
407. But the party seeking reformation must prove the mutual mistake by “clear and
satisfactory” evidence, “so as to establish the fact beyond cavil.” Crane v Smith, 243 Mich 447,
450; 220 NW 750 (1928); see also Stevenson v Aalto, 333 Mich 582, 589; 53 NW2d 382 (1952)
(stating that the burden is on the party seeking reformation and that the evidence “must be
convincing and must clearly establish the right to reformation”). A mutual mistake may be one
of fact or one of law. See Schmalzriedt v Titsworth, 305 Mich 109, 118-119; 9 NW2d 24 (1943).
Further, mistakes of law are divided into two classes: mistakes regarding the legal effect of the
contract actually made and mistakes in reducing the instrument to writing. Id. at 119-120.
“In the former, * * * the contract actually entered into will seldom, if ever,
be relieved against unless there are other equitable legal features calling for the
interposition of the court; but in the second class, where the mistake is not in the
contract itself, but terms are used in or omitted from the instrument which give it
a legal effect not intended by the parties, and different from the contract actually
made, equity will always grant relief unless barred on some other ground, by
correcting the mistake so as to produce a conformity of the instrument to the
agreement.” [Id. at 120, quoting 10 RCL at 315.]
A court may also, under certain circumstances, reform a contract on the basis of a
unilateral mistake. Michigan has long recognized that an agreement may be reformed because of
a unilateral mistake that was induced by fraud. See Windham v Morris, 370 Mich 188, 193; 121
NW2d 479 (1963). However, fraud is not a necessary element of every action to reform an
agreement on the basis of a unilateral mistake. Our Supreme Court has stated:
“[I]f one party at the time of the execution of a written instrument knows
not only that the writing does not accurately express the intention of the other
party as to the terms to be embodied therein, but knows what that intention is, the
latter can have the writing reformed so that it will express that intention.”
[Woolner v Layne, 384 Mich 316, 318-319; 181 NW2d 907 (1970), quoting 2
Restatement Contracts, § 505, p 973.]
See also Barryton State Savings Bank v Durkee, 325 Mich 138, 140-142; 37 NW2d 892 (1949)
(recognizing that a contract may be reformed because of a unilateral mistake where the other
party had knowledge of the mistake and concealed that knowledge). Consequently, although
White Pine correctly notes that there was no evidence that JPMS induced the Partnership into
making a mistake through fraud, the trial court could reform the deed at issue on the basis of a
unilateral mistake without a showing of fraud.
D. The Evidence
In support of its contention that the deed at issue should be reformed to include the
restrictions provided in the purchase agreement, the Partnership relied on the language of the
purchase agreement, Schappacher’s deposition, and Jelinek’s affidavit. The purchase agreement,
which was signed by Schappacher, clearly provides that “[t]he deed to be executed in
conveyance of the subject Property shall contain” the specified building and use restrictions.
Hence, by signing this agreement, the parties expressly stated that it was their mutual intent that
the deed would contain these restrictions. See Quality Products & Concepts Co v Nagel
Precision, Inc, 469 Mich 362, 375; 666 NW2d 251 (2003) (“[A]n unambiguous contractual
provision is reflective of the parties’ intent as a matter of law.”).
Further, Schappacher’s deposition testimony confirms that the restrictions were an
important part of the negotiations between the parties. Schappacher testified that he participated
in negotiations concerning two different parcels of property owned by the Partnership. He stated
that JPMS had initially sought a different piece of property than the one eventually purchased.
He explained that, after Johnson agreed to modify the building and use restrictions for that first
property, Johnson raised the purchase price. Because the new price was “more expensive than
what we thought worked for our project,” Schappacher began to look at the possibility of
purchasing the property at issue. Schappacher admitted that he was aware of the restrictions
contained in the purchase agreement for that property. But he contended that he did not intend
them to apply to the property, and that there were continuing discussions even after the signing
of the deal. Nevertheless, Schappacher admitted that the continued discussions only concerned
approvals and sewer credits that were specifically contemplated under the purchase agreement.
He also confirmed that none of these discussions involved waiving or modifying the deed
In addition to this testimony, the Partnership submitted Jelinek’s affidavit. Although
Jelinek carefully avoided taking responsibility for the failure to include the restrictions on the
deed, he did aver that the restrictions were “not attached” to the deed “as provided by the
Purchase Agreement” and that the affidavit was being made to correct the deed to reflect the
parties’ actual intent. Hence, he averred that he knew that the deed should have contained the
This evidence established the existence of a mutual mistake of law. See Schmalzriedt,
supra at 120. The Partnership clearly wanted to ensure that the property it sold remained subject
to the restrictions. Indeed, the Partnership refused to modify the restrictions on the first property
without also raising the price, which in effect ended the first set of negotiations. The fact that
Schappacher actually negotiated a change to the first set of restrictions, but only for an increased
price, also shows that he was aware of the importance of the restrictions. Hence, these prior
negotiations bolster the conclusion that, when Schappacher and Johnson signed the purchase
agreement, they had agreed on behalf of their respective entities that the deed should contain the
restrictions. And there was no evidence that, thereafter, Schappacher or anyone at JPMS made
efforts to remove the restrictions from the deed. Finally, the Jelinek affidavit establishes that the
deed did not contain these restrictions even though it was the intent of the parties to have them
attached. Thus, this evidence indicates that both parties specifically intended the deed to contain
terms that imposed building and use restrictions on the property. Because the terms were
omitted from the deed, the deed did not have the legal effect intended by the parties. Hence, the
Partnership was entitled to reformation of the deed on the basis of mutual mistake. Stevenson,
supra at 589.
Notwithstanding this evidence, White Pine argues that the trial court could not find a
mutual mistake. White Pine bases this argument on Schappacher’s deposition testimony and
affidavit to the effect that he did not want the restrictions to apply. However, neither of these
submissions establishes that, notwithstanding that inclination, JPMS did not ultimately intend to
acquiesce to the restrictions to complete the sale. Further, Schappacher’s assertions in this
regard are based largely on his account of continuing interactions with Johnson after he signed
the purchase agreement. However, Schappacher admitted that these subsequent discussions did
not involve the restrictions, but were instead entirely related to requirements contemplated by the
purchase agreement. Hence, Schappacher’s self-serving statements are belied by his own
testimony, and they do not establish a question of fact regarding the mutuality of the mistake.
Schappacher’s affidavit not only fails to refute the mutuality of the mistake, it actually
bolsters the conclusion that Schappacher fully expected the deed to be subject to the restrictions
in the purchase agreement. In his affidavit, Schappacher averred that there were a number of
matters “that needed to be resolved prior to the closing.” These matters included JPMS’s
“concerns with the restrictions set forth in the Preliminary Sales Agreement.” According to
Schappacher, the attorneys wanted to “clarify some of the language before closing.” This is
clear evidence that Schappacher was aware of the restrictions and believed that the deed would
contain the restrictions. In fact, these averments support an inference that Schappacher still
expected the restrictions to apply, albeit hopefully with some clarification.
Notwithstanding this, Schappacher further averred:
All of these considerations, concerns and contingencies [were] considered
in totality just prior to closing. All matters relating to title, including the review
of the title insurance and the warranty deed was delegated to legal counsel. The
closing documents, including the warranty deed, were approved by legal counsel
with notice and understanding that the use restrictions were not contained therein.
There was no mistake or misunderstanding on the part of JPMS.
On the surface this appears to suggest that JPMS intended the deed to be free of the restrictions.
However, on closer examination, it does not establish a question of fact concerning the mutuality
of the mistake.
Schappacher averred that he empowered his attorneys to deal with “[a]ll matters relating
to title,” but at no point did he say that he told his attorneys to refuse to close the deal without
first renegotiating the restrictions. In addition, Schappacher did not aver that he or his attorneys
actually expressed any concern to the Partnership or otherwise initiated any discussions about the
restrictions. Indeed, it is undisputed that the parties did not even attend the closing. Hence, the
affidavit does not support an inference that JPMS no longer expected the deed to include the
Likewise, Schappacher’s averment that the final deed was approved “with notice and
understanding” that the deed did not contain the restrictions is not the equivalent of stating that
JPMS did not intend or expect the deed to contain the restrictions. Rather, taken in context of the
earlier averment that his attorneys were concerned about the language of the restrictions even
just before the closing, it is clear that JPMS fully expected the deed to contain the restrictions.
Given the prior negotiations concerning deed restrictions that resulted in a lost opportunity to
purchase the first property, JPMS must have been surprised when the title company sent a deed
with no restrictions. In that sense, because the deed was not as it was expected to be under the
parties’ agreement, JPMS knew it was a document that had been mistakenly drafted. And the
fact that the attorneys approved the deed with the full understanding that it did not contain the
contemplated restrictions does not transform the omission into a unilateral mistake.
Consequently, the trial court properly determined that the deed did not reflect the actual intent of
either party and, accordingly, should be reformed as a mutual mistake.
Even if we were to conclude that Schappacher’s affidavit created a question of fact
concerning whether the mistake was mutual, the Partnership would still be entitled to relief under
unilateral mistake precedents. Reformation would be warranted if JPMS knew that the
Partnership intended the restrictions to be included within the deed, recognized that the deed did
not accurately express that intent, and remained silent about the mistake. Woolner, supra at 318319; Barryton State Savings Bank, supra at 141-142.
Assuming that Schappacher’s affidavit supports an inference that JPMS no longer
intended the deed to contain the restrictions, there is no evidence that the Partnership had any
intention of voluntarily relinquishing the restrictions negotiated in the purchase agreement.
Indeed, as already noted, Schappacher’s affidavit supports the conclusion that JPMS fully
expected the Partnership to send a deed that contained the restrictions. Further, Schappacher
averred that his attorneys recognized that the deed did not contain the contemplated restrictions
and approved it on that basis. Thus, the undisputed evidence supports an inference that JPMS
knew that the Partnership intended the deed to contain the restrictions, recognized that the
restrictions had been omitted, and remained silent about the mistake. Therefore, even if the
mistake were unilateral, the evidence submitted by the parties would still warrant reformation of
the deed. Woolner, supra at 318-319; Barryton State Savings Bank, supra at 141-142.
Finally, we note that White Pine’s statement of the question presented for this issue
suggests that the trial court could not grant the Partnership relief on the basis of unilateral
mistake or fraud because the Partnership failed to plead fraud. However, White Pine did not
properly support this argument with analysis or citation of relevant authorities in its brief.
Rather, White Pine confined its argument to analyzing whether the record evidence was
sufficient to establish grounds for reforming the deed. Therefore, to the extent that White Pine
raised this issue, it abandoned it on appeal. Hamade, supra at 173. In any event, White Pine
does not argue that the trial court could not grant relief on the basis of a unilateral mistake and,
as already noted, relief for a unilateral mistake may be granted even in the absence of fraud.
Consequently, even if White Pine had not abandoned this argument, it would be without merit.
The trial court properly granted summary disposition with regard to the Partnership’s
request to reform the deed.
White Pine next argues that the trial court erred when it failed to apply the Partnership’s
admission that the cell tower did not constitute utility wires or conduits within the meaning of the
A. Standard of Review
The interpretation and application of a court rule involves a question of law that this
Court reviews de novo. Associated Builders & Contractors v Dep’t of Consumer & Industry
Services Director, 472 Mich 117, 123-124; 693 NW2d 374 (2005). However, this Court reviews
the factual findings underlying a trial court’s application of a court rule for clear error. MCR
2.613(C). A finding is clearly erroneous when this Court is left with a definite and firm
conviction that a mistake has been made. Massey v Mandell, 462 Mich 375, 379; 614 NW2d 70
On October 19, 2006, White Pine allegedly served requests for admissions on the
Partnership. These included requests for the Partnership to admit that the cell tower did not
constitute a “utility wire” or “conduit.” The Partnership purportedly failed to respond to the
requests and, in its motion for summary disposition, White Pine asked the trial court to deem
these requests admitted. But the Partnership responded by arguing and presenting evidence that
it was never served with requests for admissions. White Pine countered with its own evidence
that it had in fact served the requests on the Partnership. In its opinion and order granting
summary disposition in favor of the Partnership, the trial court found that the Partnership had not
been served with the requests for admissions: “The Court is persuaded from the Affidavit of
Attorney [Mark] Hullman [plaintiff’s attorney] and supporting exhibits that the Requests to
Admit were not received.” For that reason, the trial court did not deem the requested admissions
as having been made.
Under MCR 2.312(B)(1), a party served with requests for admission must answer the
requests within 28 days. If the party served does not answer within the specified time, the
requested admissions are deemed as having been made. Id. But as a threshold matter, the
requests must actually be served before a party can be faulted for failing to respond. Hence, the
trial court had to determine whether the Partnership actually received the requests. On the basis
of a credibility assessment of the evidence submitted by the Partnership, the trial court found that
the Partnership had not received the requests.
On appeal, White Pine presents the same evidence that it submitted to the trial court in
support of its contention that it did in fact serve the requests. But this is insufficient to
demonstrate clear error. The dispute over the admissions came down to a credibility assessment
of the parties’ submissions, including the Partnership’s attorney’s affidavit. And the trial court
resolved this credibility assessment in favor of the Partnership. Although the trial court’s
credibility assessment was based primarily on written submissions, the trial court’s familiarity
with the proceedings and the parties’ counsel gave it a superior insight into the validity of the
competing claims. Because the evidence does not clearly favor either party, we shall defer to the
trial court’s superior ability to judge the credibility of the parties’ attorneys. Sparling Plastic
Industries, Inc v Sparling, 229 Mich App 704, 716; 583 NW2d 232 (1998). There was no error
VIII. Application of the Restrictions
White Pine and JPMS also argue that the trial court erred when it interpreted the
restrictions to preclude the construction of a cell tower on the property at issue.1
A. Standard of Review
The interpretation of restrictive covenants is a question of law that this Court reviews de
novo. Terrien v Zwit, 467 Mich 56, 60-61; 648 NW2d 602 (2002). In construing restrictive
covenants, the overriding goal is to ascertain the intent of the parties. Tabern v Gates, 231 Mich
581, 583; 204 NW 698 (1925). Where the restrictions are unambiguous, they must be enforced
as written. Hill v Rabinowitch, 210 Mich 220, 224; 177 NW 719 (1920). However, restrictions
are strictly construed against the would-be enforcer and doubts are resolved in favor of the free
use of property. Stuart v Chawney, 454 Mich 200, 210; 560 NW2d 336 (1997).
We note that White Pine also argues as part of this issue that the restrictions have expired.
However, this argument is premised on White Pine’s contention that the purchase agreement was
between the Trust and JPMS, and not between the Partnership and JPMS. As already noted,
because White Pine failed to properly preserve this issue, it has been waived. For this reason, we
will only address whether a cell tower constitutes “other utility wires or conduits” within the
meaning of the restrictions.
B. Utility Wires and Conduits
The first restriction at issue states, in relevant part, that “[n]o power, telephone or other
utility wires or conduits shall be installed above ground on the property other than the currently
existing power lines.” The cell tower at issue is clearly a structure installed above ground.
Hence, the only question is whether the cell tower constitutes “power, telephone or other utility
wires or conduits . . . .”
On appeal, both White Pine and JPMS argue that the cell tower does not constitute
“wires” or “conduits” within the meaning of the restrictions. In addition, White Pine argues that,
because the cell tower is not available for use by the public, it cannot be a “utility.”
A “utility” is commonly understood to be “a public service, as the providing of
electricity, gas, water, a telephone system, or bus and railroad lines.” Random House Webster’s
College Dictionary (1997). Because the word utility in the agreement modifies “wires or
conduits,” the restriction only applies to wires and conduits that relate to the provision of public
services, such as electricity, gas, water, and a telephone system. It is undisputed that the cell
tower is being used as part of a telephone system. Furthermore, the restriction also applies
expressly to “telephone . . . wires or conduits . . . .” Because this restriction is not ambiguous, it
must be enforced as written. Hill, supra at 224.
Nevertheless, it is not clear that the cell tower constitutes “wires or conduits . . . .” The
Partnership submitted photos of the cell tower, which do not readily exhibit any wiring.
However, a “conduit” is commonly understood to mean “a pipe, tube, or natural channel for
conveying water or other fluid,” “a channel through which anything is conveyed,” and “a
structure containing ducts for electrical conductors or cables.” Random House Webster’s
College Dictionary (1997). It would seem that the cell tower must contain some cables that are
necessary for the transmission of telephone signals. And, if it does have such cables within it,
they would constitute either “conduit” or “wire” within the plain and ordinary meaning of the
restriction. However, there is no record evidence to establish the existence of wiring or cable
within the cell tower. For that reason, we conclude that the trial court prematurely determined
that the cell tower violated the restriction.
C. Unnatural Improvement
On appeal, the Partnership argues that the trial court did not err when it determined that
the cell tower was a utility conduit, but also argues that the cell tower is an unnatural
improvement within the meaning of the restriction labeled “(k).” This restriction provides: “No
statue, fence or other unnatural improvements shall be permitted on the Property without the
approval of his [sic] Seller or successor.” The trial court determined that the fence surrounding
the cell tower was prohibited, and neither White Pine nor JPMS contends that the fence would
not be barred under the restriction. However, the trial court did not determine whether the cell
tower constituted an unnatural improvement.
An “improvement” in the context of real property is defined as “a change or addition by
which a thing is improved,” and “unnatural” is defined to be something that is “at variance with
what is normal or to be expected.” Random House Webster’s College Dictionary (1997).
Hence, an unnatural improvement to property would be any improvement that was at variance
with what is normal or to be expected. Although this understanding could be construed broadly,
the reference to “statue” and “fence” may limit the application of this restriction. See Griffith v
State Farm Mut Automobile Ins Co, 472 Mich 521, 533; 697 NW2d 895 (2005). Rather than
making this determination on appeal and especially in consideration of the fact that it may be
unnecessary if the trial court concludes that the cell tower is prohibited by the restriction against
utility “wires or conduits,” we conclude that this matter should be determined in the first
instance, if necessary, by the trial court.
The trial court properly determined that the fence surrounding the cell tower violated the
restrictions. However, although the cell tower may constitute “wires or conduits,” there is
insufficient record evidence to establish this fact. Further, if that fact is not established, a
determination must be made whether the cell tower is an “unnatural improvement . . . .”
Therefore, on these limited bases, we reverse the trial court’s grant of summary disposition and
remand for further proceedings.
IX. Recording Statutes and Equitable Defenses
White Pine next argues that it should be treated as a bona fide purchaser for value without
notice of the restrictions and, therefore, protected under the recording statutes. White Pine also
argues that it would be inequitable to apply the restrictions to White Pine under the facts of this
Under Michigan’s recording statutes, all subsequent owners or encumbrances take
subject to recorded liens, rights, or interests. MCL 565.25(4). It is undisputed that the deed at
issue did not contain any restrictions. Because the restrictions were not recorded, they would be
void against a subsequent purchaser in good faith for valuable consideration. MCL 565.29.
Hence, if White Pine were a purchaser in good faith for valuable consideration, it would not be
subject to the restrictions.
A good faith purchaser is one who purchases without notice of a defect in the vendor’s
title. Richards v Tibaldi, 272 Mich App 522, 539; 726 NW2d 770 (2006). Notice can be actual
or constructive. Id. In the present case, White Pine entered into an agreement with JPMS
concerning the lease of a portion of the property at issue before it had any notice—actual or
constructive—regarding the use restrictions. However, although the agreement contained all the
provisions of a valid lease, it was initially only an option to lease. In order to exercise the option
and commence the lease, White Pine had to pay JPMS $550.
A lease can constitute an interest in real property. See MCL 565.35. However, an option
to lease is not such an interest. This Court has held that an option to purchase land is “a
preliminary contract for the privilege of purchase and not itself a contract of purchase.” Oshtemo
Twp v City of Kalamazoo, 77 Mich App 33, 37; 257 NW2d 260 (1977). Because an option is
essentially an offer that requires strict compliance, it does not create an interest in land until the
conditions of the offer are met. Id. at 37-38. Similarly, an option to lease does not transfer an
interest in land until the option is exercised. Because it is undisputed that White Pine had actual
notice of the Partnership’s claim that the property was subject to the restrictions before it
exercised its option to lease, it was not a purchaser in good faith without notice of a defect in the
title. Richards, supra at 539.
Courts in Michigan will also refrain from reforming deeds where “‘the rights of third
parties intervene.’” Scott, supra at 239 (citation omitted). And courts may consider the
negligence of the party seeking reformation. See McGinn v Tobey, 62 Mich 252; 28 NW 818
(1886). However, under the facts of this case, the equities do not weigh against enforcing the
restrictions against White Pine.
The Partnership’s failure to ensure that the deed contained the restrictions is not the type
of negligence that would ordinarily prevent reformation of a deed. See Urick, supra at 174.
Further, the undisputed facts of this case demonstrate that White Pine became aware of the
Partnership’s claims before it had exercised its option to lease. Although White Pine likely
expended funds to investigate the site, perform due diligence, and initiate the permit process,
because it had not exercised the option to lease and had not begun to erect the cell tower, it
clearly had the ability to limit its losses. Despite full knowledge of the issues raised by the
Partnership, White Pine deliberately proceeded with its plans; it should not now be heard to
complain about the result.
Finally, JPMS argues that the trial court should have concluded that the doctrine of laches
precluded reformation of the deed.
The doctrine of laches is a tool of equity that remedies the inconvenience resulting from a
party’s failure to assert a right that was practicable to assert. Dep’t of Pub Health v Rivergate
Manor, 452 Mich 495, 507; 550 NW2d 515 (1996). This tool is applicable in cases “in which
there is an unexcused or unexplained delay in commencing an action and a corresponding change
of material condition that results in prejudice to a party.” Id. In its motion for summary
disposition, the Partnership submitted the affidavit of its real estate agent, Lee Bussa. In the
affidavit, Bussa averred that he first learned of White Pine’s intention to build a cell tower when
White Pine applied for a permit to construct the tower in the spring of 2006. He also stated that
it was only shortly thereafter that he learned that the deed did not contain the restrictions
provided by the purchase agreement. Hence, considering these undisputed facts, the Partnership
acted as soon as practicable. Id. Therefore, the doctrine of laches does not bar the reformation
of the deed.
XI. General Conclusion
The trial court did not err when it exercised its equitable power to reform the deed to
include the intended restrictions. Likewise, the trial court did not err when it enjoined the
erection of fencing and ordered the removal of the existing fence. Those parts of the trial court’s
order are affirmed. However, the trial court erred when it determined that the cell tower at issue
constituted “wires or conduits” without record evidence demonstrating that the cell tower housed
telephone wiring or cables. Therefore, we reverse the part of the trial court’s order enjoining the
construction of a cell tower on the property at issue and ordering the removal of the existing cell
tower. We remand for a hearing concerning whether the cell tower constitutes “wires or
conduits” within the meaning of the deed restrictions. Further, whether the cell tower constitutes
an “unnatural improvement” within the meaning of the restrictions should be considered on
remand, if the trial court determines that the cell tower does not constitute prohibited “wires or
conduits . . . .”
We affirm in part, reverse in part, and remand for further proceedings consistent with this
opinion. We do not retain jurisdiction.
/s/ Richard A. Bandstra
/s/ Peter D. O’Connell
/s/ Elizabeth L. Gleicher