LIGHTHOUSE PLACE DEVELOPMENT LLC V MOORINGS ASSN
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STATE OF MICHIGAN
COURT OF APPEALS
LIGHTHOUSE PLACE DEVELOPMENT, LLC,
UNPUBLISHED
April 28, 2009
Plaintiff/Counter-DefendantAppellee,
v
MOORINGS ASSOCIATION, d/b/a MOORINGS
CONDOMINIUM ASSOCATION,
Defendant/Counter-Plaintiff/ThirdParty-Plaintiff-Appellant.
v
HARBOR GRAND, LLC and LIGHT HARBOR
MOORINGS CONDOMINIUM ASSOCIATION,
Third-Party-Defendants,
and
LIGHT HARBOR MOORINGS CONDOMINIUM
ASSOCATION,
Cross-Plaintiff,
v
HARBOR GRAND, LLC
Cross-Defendant.
Before: Murray, P.J., and Markey and Wilder, JJ.
PER CURIAM.
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No. 280863
Berrien Circuit Court
LC No. 05-003263-CH
In this action to quiet title and damages for slander of title, defendant Moorings
Association (Moorings), appeals by right the trial court’s September 5, 2007 opinion and order in
favor of plaintiff Lighthouse Place Development, L.L.C. (Lighthouse), awarding plaintiff
$15,000 in special damages and attorney fees totaling $146,550.1 Defendant also appeals the
trial court’s February 22, 2006 order granting plaintiff summary disposition on defendant’s
counterclaim and third-party claim against the Harbor Grand Limited Partnership (Harbor
Grand) and its general partner, KEM Development, Inc. The Moorings sought to reform its 1997
agreement with Harbor Grand, which terminated a 1985 seasonal parking easement the Moorings
held in property that Lighthouse acquired in 2003 to develop a 10-unit residential condominium
project, Light Harbor Moorings Condominium (Light Harbor). Additionally, defendant appeals
the trial court’s March 27, 2006 grant of partial final judgment quieting plaintiff’s title free from
any claim by the Moorings to an easement. Defendant argues on appeal that plaintiff lacked
standing to bring this action, that the 1997 agreement was a unilateral action by the Moorings
that could not modify or destroy the 1985 easement, that the termination of the 1985 easement
resulted from a mutual mistake of the parties to the 1997 agreement, entitling the Moorings to
the equitable remedy of reformation, that plaintiff’s slander of title claim must fail because the
Moorings acted without malice on the advice of counsel, and that the trial court erred in
assessing damages and by awarding plaintiff attorney fees. We affirm.
I. Factual Background
The lawsuit involves property situated near Lake Michigan in New Buffalo, Michigan.
The Moorings is a condominium of 369 boat slips that defendant refers to as a “dockominium
association” in which its members own boat slips rather than residences. The common
predecessor in title to Lighthouse, the Moorings, and Harbor Grand, is New Buffalo Harbor, Inc.
To support parking for Moorings owners, New Buffalo Harbor granted to the Moorings several
non-exclusive, seasonal (from April 15 to October 15), parking easements to run with the land.
Some of these parking easements were on both sides of Oselka Drive, which runs parallel to an
Amtrak line that runs across the back part2 of property plaintiff later acquired and its adjacent
neighbor to the southwest, Harbor Grand. New Buffalo Harbor granted the parking easement at
issue in this case to the Moorings on June 19, 1985; the easement was recorded in the office of
Berrien County Register of Deeds in Liber 1234, Page 417.
In 1994, Harbor Grand and KEM began to develop a hotel on its property. A dispute
soon arose between defendant and Harbor Grand regarding parking rights of Moorings owners
and Harbor Grand hotel quests. The Moorings sued Harbor Grand and KEM seeking to confirm
its parking rights under the easements were exclusive; KEM and Harbor Grand in turn filed a
1
Attorney fees were allocated as follows: $48,000 for the quiet title action, $87,750 for legal
work on the slander of title action up to trial, and $10,800 for trial preparation, trial, and posttrial briefing. The trial court entered a “final judgment” on September 26, 2007 for a total
monetary award to plaintiff of $161,550 and $345 in taxable costs.
2
Oselka Drive and the railroad tracks run in a southwesterly or northeasterly direction generally
parallel to Lake Michigan. The “back part” refers to the property furthest from Lake Michigan.
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third-party complaint against New Buffalo Harbor and others. To settle this litigation the
Moorings and Harbor Grand and KEM entered an agreement to terminate certain easements,
which provided in part, “the parties agree that any and all easements and rights of way, whether
of record or not of record as of the date of this Agreement, including, but not limited to, the
Parking Easements recorded at Liber 1206, Page 933, Liber 1133, Page 846, Liber 1186, Page
292, and Liber 1234, Page 417, and burdening the parties hereto or the Parking Parcels, shall be
terminated . . . .” This agreement was dated July 26, 1997 and recorded August 1, 1997 in Liber
1824, Page 237. As part of the settlement agreement, Harbor Grand conveyed certain property to
the Moorings, and the parties drafted new documents to reflect their respective rights. Attorneys
Michael Chojnowski and James Geary represented defendant in the KEM litigation. Chojnowski
had represented the Moorings since its creation and drafted or reviewed all the easements or
agreements pertinent to this case.
In 2003, plaintiff acquired its property immediately adjacent and to the east of Harbor
Grand’s property. After plaintiff began constructing its 10-unit condominium project, a city of
New Buffalo building inspector informed James Gierczyk, plaintiff’s principal, that the
Moorings had complained the construction was encroaching on the Moorings 1985 parking
easement along Oselka Drive. According to Gierczyk’s testimony, he believed that plaintiff had
purchased its property free and clear of any encumbrances but could not halt construction to
dispute the Moorings’ claim. Further, Gierczyk testified he was led to believe that he could
make the problem “go away” by paying to the Moorings $15,000. Consequently, plaintiff paid
defendant $15,000, and the parties on September 16, 2003 executed a sales agreement of a 10foot strip of the 1985 easement, which the Moorings quit claimed to plaintiff.
The present dispute developed in 2004-2005 when plaintiff became a leading advocate of
a plan to relocate the Amtrak station from south of the city to downtown New Buffalo along
Oselka Drive. Plaintiff desired to build an Amtrak station on its property along Oselka Drive
and donate the property to the city, which in turn could lease the train station to Amtrak.
Defendant’s principal manager, Byron Higgins, complained to the city manager that this plan
would interfere with the 1985 parking easement. The city manager in an August 24, 2005 letter
to Gierczyk stated that for the Amtrak project to go forward, plaintiff would have prove it held
unrestricted fee simple title to the property, unencumbered by any parking easements, so that
parking for the proposed Amtrak station could be accommodated. Gary Gillings, plaintiff’s onsite manager, responded to the city manager’s letter to Gierczyk with a September 23, 2005
memorandum attaching copies of the following: (1) the 1985 parking easement recorded at Liber
1234, Page 417; (2) the July 26, 1997 agreement terminating easements recorded at Liber 1824,
Page 237; (3) a July 26, 1997 parking easement agreement between the Moorings and Harbor
Grand and KEM recorded at Liber 1824, Page 417 (including ¶ 8 providing the “parties
acknowledge and agree that the Parking Easements recorded at . . . Liber 1234, Page 417 have
been terminated . . . .”); and (4) title work showing plaintiff’s fee simple ownership in the subject
property.
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The trial court in its September 5, 2007 opinion and order, referring to stipulated trial
exhibits,3 described the flurry of activity that followed:
On October 4, 2005, Defendant’s attorney [William Redman] wrote a
letter to Mr. Gierczyk and the Lighthouse Board, with a copy to the New Buffalo
City Manager, demanding that Plaintiff cease interfering with its seasonal
easement, even though counsel and the Moorings Board had personal knowledge
that the 1985 Easement had been terminated in 1997 and was no longer in
existence, Exhibit 5. Shortly thereafter, on October 12, 2005, Plaintiff’s counsel
[Stephen Hilger] responded to the October 4th letter with a plea for Defendant to
withdraw its claim of interest by reason of an easement that had been terminated.
Defendant refused to do so, Exhibit 7. On November 8, 2005, Plaintiffs counsel
sent a final plea to Defendant, which was disregarded. City Manager Johnson
testified that this litigation cloud made it impossible for the City to go forward
with the approval process for the [Amtrak] platform. [Opinion & Order, p 8.]
While attorneys Redman and Hilger were corresponding, attorney Chojnowski on
October 12, 2005 forwarded to Harbor Grand’s attorney a proposed “First Amendment to
Agreement Terminating Easements,” the purpose of which Chojnowski wrote was to “eliminate
the prior termination of the easement recorded at Liber 1234, Page 417, which was inadvertently
included in the list of recorded easements previously terminated in 1997.” Harbor Grand’s
representative signed the “First Amendment to Agreement Terminating Easements” on
November 4, 2005, and Ronald E Specht, the Moorings’ president, signed on November 10,
2005. Attorney Redman forwarded a copy of the document to attorney Hilger on November 14,
2005. The document was record at Liber 2665, Page 992 on November 16, 2005.
Plaintiff filed this lawsuit on December 7, 2005, asking for declaratory relief, to quiet
title, and damages for slander of title.4 Plaintiff subsequently filed a motion for a temporary
restraining order or preliminary injunction to preclude defendant from asserting to Amtrak and
the city of New Buffalo and others that it held easement rights to plaintiff’s property. The trial
court held a hearing on plaintiff’s motion on December 20 and 21, 2005, at which Gillings,
Chojnowski, and Bryon Higgins, defendant’s manager, testified. During the course of this
hearing, the trial court ruled that the November 2005 amendment to the 1997 agreement
terminating easements was ineffective as a matter of law in reviving the 1985 easement. The
court ruled that reformation was a judicial, equitable remedy that defendant must seek by way of
a counterclaim or cross-claim. Specifically, the court ruled that defendant, who no longer had an
easement, could not “just create [one] out of whole cloth” by an extrajudicial amendment to an
agreement terminating an easement. Consequently, at the conclusion of the hearing the court
determined that as the case then stood, plaintiff had shown the likelihood of success on the
3
Before the June 26-27, 2007 bench trial, the parties entered into a stipulation of facts with 62
paragraphs. In the last paragraph the parties agreed to the admission of 198 trial exhibits.
4
In its first amended complaint filed January 10, 2006, plaintiff added a count seeking rescission
and restitution regarding the $15,000 it had paid defendant in 2003 for a quit claim deed.
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merits and the elements necessary for the issuance of a preliminary injunction, which was issued
January 18, 2006. The order included the statement: “All issues regarding reformation lie within
the province of this Court after a hearing on the merits.”
Defendant subsequently filed a third-party complaint against Harbor Grand and Light
Harbor to reform the 1997 agreement terminating easements, and a similar cross-claim against
Lighthouse. The trial court heard the parties’ arguments on plaintiff’s motion for summary
disposition regarding these claims on February 8, 2006. The trial court ruled that the motion
should be granted on the third-party complaint against Harbor Grand under MCR 2.116(C)(4)
(lack of jurisdiction) because there was no adversarial relationship between defendant and
Harbor Grand as both wanted to reform the 1997 agreement consistent with the November 2005
amendment the court had ruled was a nullity. The court granted plaintiff summary disposition on
defendant’s counterclaim and third-party claim against Light Harbor under MCR 2.116(C)(8),
ruling that neither Lighthouse nor Light Harbor were parties or privies of parties to the 1997
agreement. In addition, citing von Meding v Strahl, 319 Mich 598, 606; 30 NW2d 363 (1948)5
(an easement cannot “be granted by deed, estoppel, or otherwise, by anyone but the landowner”),
the trial court further reasoned:
In this case it is clear that the 1985 seasonal parking easement ended in 1997.
Once the seasonal parking easement was terminated by the agreement terminating
easements, the only way the easements can be revived is by creation of a new
easement signed by the grantor, which at this time would exclusively be plaintiff
or third party defendant, [Light Harbor].
Since neither plaintiff nor -- excuse me -- Light Harbor -- since neither plaintiff
nor Light Harbor were parties to the agreement terminating easements, no
reformation of the agreement terminating easements can affect or be imputed to
plaintiff or Light Harbor. Thus, plaintiff’s motion for summary disposition
pursuant to MCR 2.I16(C)(8) is granted. [Hearing 02/08/2006, p 38.]
The trial court’s order regarding these rulings was entered on February 22, 2006.
The parties were before the court again to argue plaintiff’s motion for partial summary
disposition on its quiet title claim and defendant’s motion for summary disposition on the basis
that plaintiff lacked standing and was not the real party in interest. The essence of defendant’s
claim is that the 1985 easement only affected the common areas of Light Harbor, and, after
plaintiff recorded the master deed of condominium on February 25, 2004, only the Light Harbor
Condominium Association could take legal action to enforce rights with respect to the common
areas of Light Harbor Condominium. The trial court granted plaintiff’s motion and denied
defendant’s motion, reasoning as follows:
5
Harrison v Heald, 360 Mich 203; 103 NW2d 348 (1960) overruled the holding of von Meding
regarding the creation of an easement by reservation as explained in Schmidt v Eger, 94 Mich
App 728, 733-735; 289 NW2d 851 (1980).
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The court finds that defendant’s motion for summary disposition pursuant to
MCR 2.116(C)(8) should be and is denied.
In this case, plaintiff asserts that it is the owner of the property. For a (C)( 8 ), the
court has to accept as true all well pled allegations. Therefore, the court must
deny the motion under MCR 2.116(C)(8).
Furthermore, the court denies the motion if I’m considering it as a (C)(10).
Rather, the court finds in favor of the plaintiff as to motion for entry of partial
final judgment on the quiet title claim based upon my earlier rulings. The only
question is whether the partial final judgment should be in the name of plaintiff,
Lighthouse Place Development, LLC, or whether it should be in the name of
Light Harbor Moorings Condominium Association, or whether it should be in
favor of both.
Because the motion was filed in the name of the development company, and in
fairness to the defense, I’m going to grant the motion in favor of plaintiff. But it’s
going to be plaintiff as presently named, not the condominium association. I
don’t know if it would have an affect on the slander of title action. But I don’t
want to prejudice the defendant in that regard. [Hearing 03/27/2006, pp 17-18.]
The trial court presided over a two-day bench trial of plaintiff’s slander of title claim on
June 26-27, 2007. The trial court issued its opinion and order on September 5, 2007, ruling in
plaintiff’s favor as noted already. In doing so, the trial court found as fact that the Moorings
acted intentionally and without mistake by terminating the 1985 easement as part of the
agreement settling the KEM litigation. The trial court wrote in this regard:
The KEM litigation, Paragraph 10 of the Complaint, was premised in part upon
the 1985 Easement. The Court finds that there was no mistake about including
the 1985 Easement in the KEM litigation. The Board’s counsel testified that
including the 1985 Easement was an intentional act in order to cast a “wide net”
to include all of the easements. The KEM litigation was settled prior to trial, thus
the issue of exclusivity of the easements was never decided on the merits. KEM
and the Moorings resolved their dispute by the Moorings acquiring the fee
underlying certain easements and by drafting new easements on the balance of
properties. The new Parking Easement Agreement is part of Exhibit 86, and was
signed and entered at the same time as the Agreement Terminating Easements,
Exhibit 3.
The Agreement Terminating Easements, Exhibit 3, and the new Parking Easement
Agreement, Exhibit 86, paragraph 8, both refer to the termination of the 1985
Easement by specific reference to the recording information, Liber 1234, Page
417.
The language of the Agreement Terminating Easements demonstrates the
Moorings’ intent to terminate all easements by the specific language that they
were terminating “any and all easements,” “whether of record or not,” and
“including but not limited to” the 1985 easement. In an April 25, 1997 letter,
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Exhibit 21, attorney Chojnowski related that he saw “no harm” in terminating all
of the easements, which included the 1985 Easement, and even stated that there
may be some benefit in terminating the easements. Since there is both direct and
circumstantial evidence of intent, with no contrary testimony by anyone who was
on the Moorings Board in 1997, the Court finds that the 1985 Easement was
intentionally terminated as part of the KEM litigation settlement.
II. Analysis
A. Standard of Review
“An action to quiet title is an equitable action, and the findings of the trial court are
reviewed for clear error while its holdings are reviewed de novo.” Fowler v Doan, 261 Mich
App 595, 598; 683 NW2d 682 (2004). “Likewise, both the interpretation of a statute and a
contract are questions of law this Court reviews de novo.” Burkhardt v Bailey, 260 Mich App
636, 646; 680 NW2d 453 (2004). Indeed, we review de novo all questions of law that are raised
on appeal. Forge v Smith, 458 Mich 198, 204; 580 NW2d 876 (1998).
An appellate court will not determine a trial court’s finding of fact is clearly erroneous
unless there is no evidence to support it or the appellate court is left with a definite and firm
conviction that a mistake has been made. Hill v City of Warren, 276 Mich App 299, 308; 740
NW2d 706 (2007). Also, in reviewing findings of fact, we accord deference to the trial court’s
special opportunity to judge the credibility of witnesses who appear before the court. MCR
2.613(C); Hill, supra.
B. Standing
Defendant first argues that plaintiff lacked standing to bring this action, or was not the
real party in interest that possessed the ability to enforce the property rights of the condominium
co-owners. See MCR 2.201(B): “An action must be prosecuted in the name of the real party in
interest . . . .” “‘A real party in interest is one who is vested with a right of action in a given
claim, although the beneficial interest may be with another.’” MOSES, Inc v Southeast Michigan
Counsel of Gov’ts, 270 Mich App 401, 415; 716 NW2d 278 (2006) (citation omitted). Here,
defendant argues that under the Condominium Act, MCL 559.101 et seq., after plaintiff recorded
the master deed of condominium on February 25, 2004, it lost its property rights in fee to the
common areas of the condominium project and only possessed rights in common with other
condominium co-owners. MCL 559.161; MCL 559.163. Further, defendant contends the
condominium act vests the right of action regarding condominium common areas in the
association of co-owners. MCL 559.160. Thus, defendant argues that only the Light Harbor
Condominium Association could bring a legal action regarding the 1985 easement because it
affected only the common areas of Light Harbor. We disagree.
First, plaintiff possessed sufficient interest in the common areas of Light Harbor to satisfy
constitutional standing. Standing refers to the right of a party to invoke the power of the court to
adjudicate a claimed injury in fact. Federated Ins Co v Oakland Co Rd Comm, 475 Mich 286,
291; 715 NW2d 846 (2006). It is a constitutional requirement based on the doctrine of the
separation of powers. Miller v Allstate Ins Co, 481 Mich 601, 606-607; 751 NW2d 463 (2008).
In general, standing requires not only that a party have a sufficient interest in the outcome of
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litigation to ensure vigorous advocacy, but also have “‘in an individual or representative capacity
some real interest in the cause of action, or a legal or equitable right, title, or interest in the
subject matter of the controversy.’” Bowie v Arder, 441 Mich 23, 42; 490 NW2d 568 (1992),
quoting 59 Am Jur 2d, Parties, § 30, p 414 (1987 ed). “[T]o have standing a plaintiff (1) must
have suffered ‘an injury in fact,’ that is, an invasion of a legally protected interest that is (a)
concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there
must be a causal connection between the injury and the conduct at issue; and (3) it must be likely
that the injury will be redressed by a favorable decision.” MOSES, Inc, supra at 413, citing
Lujan v Defenders of Wildlife, 504 US 555, 560-561; 112 S Ct 2130; 119 L Ed 2d 351 (1992).
Here, plaintiff, as the condominium developer and owner of 4 of 10 condominium units
held for sale, possessed a real interest in the litigation both as an individual and as a
representative of the Light Harbor co-owners, thereby satisfying the three criterion for
constitutional standing. Plaintiff established an injury in fact “when the defendant’s activities
directly affected the plaintiff’s recreational, aesthetic, or economic interests.” Michigan Citizens
for Water Conservation v Nestle Waters North America Inc, 479 Mich 280, 296; 737 NW2d 447
(2007). There also existed a causal connection between the injury and the defendant’s conduct at
issue, and it was likely that the injury would be redressed by a favorable decision. MOSES,
supra at 413.
Defendant’s argument that plaintiff lacked “statutory standing,” see Miller, supra at 608,
also fails. Defendant relies on MCL 559.160, which provides:
Actions on behalf of and against the co-owners shall be brought in the name of
the association of co-owners. The association of co-owners may assert, defend, or
settle claims on behalf of all co-owners in connection with the common elements
of the condominium project. [Emphasis added.]
Plainly, § 160 grants standing to a condominium co-owners association to sue “on behalf
of . . . the co-owners” with respect to asserting claims regarding the common areas of a
condominium and requires that such action must be “brought in the name of the association of
co-owners.” But this section does not provide that a condominium association has the exclusive
right to “assert, defend, or settle claims on behalf of all co-owners in connection with the
common elements of the condominium project.” Rather, § 160 confers standing on a co-owners
association, which “may” take action to assert, defend, or settle claims on behalf of all co-owners
in connection with the common elements of the condominium project.” Read in conjunction
with other provisions of the Condominium Act and the master deed in this case, we conclude
plaintiff as the developer of the condominium project also possessed statutory standing to
enforce both its own interests in developing the condominium project and the co-owners’ interest
in the common areas of Light Harbor.
The Condominium Act recognizes that a person, firm, corporation, partnership, or other
legal entity engaged in such business will develop a “condominium project.” MCL 559.104(1),
106(2), 109(2). Further, before the condominium project developer can sell any condominium
units, it must record a master deed with bylaws governing the condominium project. MCL
559.108, 172. “The administration of a condominium project shall be governed by bylaws
recorded as part of the master deed, or as provided in the master deed.” MCL 559.153. The
Condominium Act impliedly acknowledges that control of the condominium project resides with
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the developer until the “transitional control date” when “a board of directors for an association of
co-owners takes office pursuant to an election in which the votes that may be cast by eligible coowners unaffiliated with the developer exceed the votes which may be cast by the developer.”
In the present case, before and during this litigation, there had had not yet been any
transition of control to a Light Harbor co-owners’ association. The project was in the
“development and sales period,” defined in ¶ 3.1(m) of the master deed as the period during
which the developer or its successor continued to offer for sale any unit of the condominium that
had not been previously conveyed or leased. Further, ¶ 4.5 of the master deed provides that by
acceptance of conveyance of a condominium unit, co-owners appoint the developer “as their
agent and attorney to act in connection with all matters concerning the common elements and
their respective interests in the common elements” during the “development and sales period.”
Condominium co-owners only have “rights to share with other co-owners the common elements
of the condominium project as are designated by the master deed,” MCL 559.163, and must
“comply with the master deed, bylaws, and rules and regulations of the condominium project,”
MCL 559.165. Consequently, by operation of the Condominium Act and the terms of the master
deed, control over the common areas of the Light Harbor was vested in plaintiff during the
timeframe of this litigation. Thus, plaintiff had both standing and was the real party interest,
vested with the right to bring this action even though the beneficial interest also resided with
other co-owners. MCR 2.201(B); MOSES, Inc, supra at 413-415.
The present case is also distinguished from Jenness v Smith, 58 Mich 280; 25 NW 191
(1885), on which defendant relies. In that case, the Court held that a party owning only an
interest in land in common with others could not alone bring an action to quiet title because the
other “owners must be represented so as to be bound by it in case the decree is adverse.” Id. at
258. In contrast, here by operation of law and the terms of the master deed, plaintiff had “full
power and authority to grant easements over, to sever or lease mineral interests, and/or to convey
title to land or improvements constituting the common elements or any part of them . . . and in
general to execute al documents and to do all things necessary or convenient to the exercise of
such powers.” Master Deed, ¶ 4.5. Consequently, Jenness is both factually and legally
distinguishable and does not control the instant situation.
C. Unilateral Modification
Defendant next argues that its 1997 settlement agreement with Harbor Grand terminating
the 1985 easement was an unlawful unilateral modification of an easement.6 Defendant cites
Schadewald v Brule, 225 Mich App 26; 570 NW2d 788 (1997). “Once granted, an easement
cannot be modified by either party unilaterally.” Id. at 36. While this is an accurate statement of
the law, we disagree with defendant’s characterization of the voluntary extinguishment of its
easement rights as part of its settlement of the KEM litigation as a unilateral modification.
6
Plaintiff argues this issue was not preserved for appeal by argument and decision below. We
choose to consider the merits because “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).
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Defendant not only stated its clear and unequivocal intent to terminate the 1985 easement in two
written documents, but also put the world on notice of the termination by recording the
documents. Although the owner of the dominant estate may not unilaterally expand and the
owner of the servient estate may not unilaterally limit the scope of an easement, defendant cites
no authority for the proposition that the owner of an easement may not voluntarily extinguish it.
When “a party fails to cite any supporting legal authority for its position, the issue is deemed
abandoned.” Prince v MacDonald, 237 Mich App 186, 197; 602 NW2d 834 (1999).
D. Mutual Mistake
Next, defendant argues that the 1997 agreement terminating the 1985 easement was
based on a mutual mistake of the contracting parties (that the 1985 easement affected Harbor
Grand’s property); therefore, the trial court erroneously held that reformation was unavailable.
While we do not necessarily agree with the trial court’s reasoning, we conclude it reached the
right result in dismissing defendant’s claims for reformation under the facts and circumstances of
this case. This Court will not reverse when the trial court reaches the correct result, albeit for a
wrong reason. Scherer v Hellstrom, 270 Mich App 458, 464; 716 NW2d 307 (2006).
Defendant relies primarily on two Michigan cases for its argument on this issue: Kowatch
v Darnell, 354 Mich 197; 92 NW2d 342 (1958) and Scott v Grow, 301 Mich 226; 3 NW2d 254
(1942). In the latter case, all parties to a deed intended to create a joint tenancy but conveyed the
property to the grantees as “tenants by entireties and not as joint tenants” creating an ambiguity
because the grantees were not married and could not hold property by the entireties. Id. at 234.
The Scott Court held that the stated facts would support an equitable claim for reformation of the
deed. Id. at 236-241. Defendant quotes the following passage from Scott:
“Where a written instrument fails to express the intention of the parties because of
a mutual mistake as to the interpretation or legal effect of the words of the
writing, though there is no misapprehension as to what words have been used,
reformation is allowed. It is not necessary, moreover, in order to establish a
mistake which may be reformed that it should be shown that particular words
were misunderstood. ‘It is sufficient that the parties had agreed to accomplish a
particular object by the instrument to be executed, and that the instrument as
executed is insufficient to effectuate their intention.’” 5 Williston on Contracts
(Rev. Ed.), p. 4423, § 1585, quoting from Leitensdorfer v. Delphy, 15 Mo. 160,
167 (55 Am. Dec. 137). [Scott, supra at 237.]
Pertinent to defendant’s claims in the present case, however, the Scott Court observed
that equity “will not grant relief for mistake as to the legal effect of the entire instrument.” Id. at
239. Here, the wording of the 1997 settlement agreement accomplished exactly what the parties
to the agreement intended at the time: to terminate the named 1985 easement described at Liber
1234, Page 417. Thus, the present case is unlike Scott where the words used in the deed did not
create the tenancy the parties intended to create. The only possible mistake the parties could
have made here was the location of the property the 1985 easement affected. This is a fact
external to the 1997 agreement that will not support an equitable claim for reformation. See
Dingeman v Reffitt, 152 Mich App 350, 356; 393 NW2d 632 (1986) (“If the asserted mutual
mistake is with respect to an extrinsic fact, reformation is not allowed, even though the fact is
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one which would have caused the parties to make a different contract, because courts cannot
make a new contract for the parties.”).
In Kowatch, three different parties agreed to buy, and the Highway Commissioner agreed
to sell, excess land adjacent to the parties’ property not needed for highway purposes. The three
purchasers engaged the same attorney to draft necessary deeds. The deeds contained inaccurate
descriptions which inadvertently conveying more property to two parties and less to the third,
contrary to what they had agreed. Kowatch, supra at 199-200. The Court affirmed the lower
court’s granting reformation of the deeds relief on the petition of the party that received less
property than all parties had agreed because “[e]ach of the purchasers took with notice of what
the others intended to buy and thought they were buying, which, in turn, coincided with what the
seller intended to sell to each.” Id. at 200. Thus, Kowatch, like Scott, was a case where a
mistake in the drafted wording of the deed did not accomplish what the parties intended.
Consequently, Kowatch, differs from the present case for the same reasons as Scott.
Finally, we do not believe the present case can be distinguished from Farm Bureau Ins
Co v Buckallew, 471 Mich 940; 690 NW2d 93 (2004). In that case, the parties agreed to the
settlement of a personal injury lawsuit for the amount of $300,000. Both parties mistakenly
believed the settlement amount was the policy limits of the tort defendant’s liability insurance.
When the mistake was discovered, Farm Bureau sought reformation of the agreement. This
Court, although agreeing a mutual mistake occurred, affirmed the trial court’s denial of
reformation on the basis that Farm Bureau must bear risk of the mistake. Farm Bureau Ins Co v
Buckallew, 262 Mich App 169, 180-181; 685 NW2d 675 (2004), vacated at 471 Mich 940
(2004). Because the settlement agreement resulted in the dismissal of the plaintiff’s lawsuit, our
Supreme Court concluded that Farm Bureau’s claim for reformation must be analyzed under
MCR 2.612, governing relief from judgment. The Court held relief was not warranted, opining:
Plaintiff’s mistake in understanding its own policy is not a mistake or excusable
neglect that can be a basis for relief under MCR 2.612(C)(1)(a). Plaintiff had
access to all the necessary information, and its error is not excused by its own
carelessness or lack of due diligence. See 3 Longhofer, Michigan Court Rules
Annotated (5th ed), p 507; Lark v The Detroit Edison Co, 99 Mich App 280, 283;
297 NW2d 653 (1980), lv den 410 Mich 906 (1981). [Buckallew, supra, 471
Mich at 940-941.]
Here, defendant had access to all information necessary to determine the location of
property to which the 1985 easement applied. In fact, defendant’s counsel wrote that he believed
the title company was wrong in its conclusion where the easement lay. Defendant, through
diligence, could have ascertained the correct location of the 1985 easement before including it in
the complaint against Harbor Grand and KEM. At the very least, defendant certainly could have
made that determination before drafting the 1997 settlement agreement that terminated the 1985
easement. As in Buckallew, defendant “had access to all the necessary information, and its error
is not excused by its own carelessness or lack of due diligence.” Quite simply, defendant has not
alleged facts supporting its claim for the equitable relief of reformation.
E. Slander of Title
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In Michigan, actions for slander of title exist under the common law and by statute. B &
B Investment Group v Gitler, 229 Mich App 1, 8; 581 NW2d 17 (1998). MCL 565.108 provides:
No person shall use the privilege of filing notices hereunder for the purpose of
slandering the title to land, and in any action brought for the purpose of quieting
title to land, if the court shall find that any person has filed a claim for that reason
only, he shall award the plaintiff all the costs of such action, including such
attorney fees as the court may allow to the plaintiff, and in addition, shall decree
that the defendant asserting such claim shall pay to plaintiff all damages that
plaintiff may have sustained as the result of such notice of claim having been so
filed for record.
The elements of the claim are the same under the statute or the common law. B & B
Investment Group, supra at 8. “To establish slander of title at common law, a plaintiff must
show falsity, malice, and special damages, i.e., that the defendant maliciously published false
statements that disparaged a plaintiff's right in property, causing special damages.” Id. Malice is
the crucial element and may be either actual or implied. Glieberman v Fine, 248 Mich 8, 12; 226
NW 669 (1929). Implied malice “means a wrongful act done intentionally without just cause or
excuse,” i.e., without probable cause to believe the validity of the claim asserted. Id. Thus, there
must be evidence from which to infer “‘that the defendant could not honestly have believed in
the existence of the right he claimed, or at least that he had no reasonable or probable cause for
so believing.’” Harrison v Howe, 109 Mich 476, 479; 67 NW 527 (1896), quoting Newell on
Defamation, 206.
The question of whether defendant acted with malice is for the trier of fact. Harrison,
supra at 480. Also, malice may be proved by circumstantial evidence. Sullivan v Thomas
Organization, PC, 88 Mich App 77, 86; 276 NW2d 522 (1979). However, malice “may not be
inferred merely from the filing of an invalid lien; the plaintiff must show that the defendant
knowingly filed an invalid lien with the intent to cause the plaintiff injury.” Stanton v Dachille,
186 Mich App 247, 262; 463 NW2d 479 (1990).
Defendant argues that evidence that a defendant acted on the advice of counsel
establishes a “complete defense” to a slander of title claim. Defendant, however, cites no
Michigan authority for this proposition. We are not bound by the foreign authority that
defendant cites. Moreover, we find these cases stand for the unremarkable proposition that
evidence a defendant acted on the advice of counsel may negate a finding of malice. See, e.g.,
Rowland v Lepire, 99 Nev 308, 313; 662 P2d 1332 (1983) (“evidence of a defendant’s reliance
on the advice of counsel tends to negate evidence of malice”). The essence of defendant’s
argument is that the trial court clearly erred by finding that plaintiff “established the elements of
falsity, express malice or malice implied in law, and certain special damages . . . .”
Although, defendant asserts on brief that its reliance on advice of counsel was
undisputed, its citation to record evidence to support its claim is sparse. Defendant refers the
Court only to limited testimony of attorney Chojnowski. Our review of the cited testimony
reveals that Chojnowski did not believe that the parties to the 1997 settlement agreement
intended to terminate the 1985 easement but that a mutual mistake had occurred. This claim was
then placed in the 2005 amendment that he conveyed to his client. But defendant cites no
evidence regarding any advice Chojnowski provided defendant regarding the efficacy of the
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1997 agreement or the 2005 document purporting to amend it. Indeed, the pages defendant cites
in the transcript contain the following question and answer by Chojnowski:
Q. All right. Well, I’m not really interested in that. What I’m interested in is, is
you know as a real estate lawyer, that once that agreement terminating
easements was signed and filed and recorded, then the easement was history?
It was over, it was done with, correct?
A. You’re asking me for a legal conclusion that I’m not comfortable answering
because it’s - - I’m not capable of determining that.
A party may not leave it to this Court to search for the factual basis to sustain or reject his
position, but must support factual assertions with specific references to the record. Derderian v
Genesys Health Care Systems, 263 Mich App 364, 388; 689 NW2d 145 (2004). We conclude
defendant’s citations to the record are insufficient given the deference we must accord under
MCR 2.613(C) to convince this Court that the trial court clearly erred in finding the malice
necessary to support plaintiff’s slander of title claim. Hill, supra at 308; Fowler, supra at 598.
F. Damages & Attorney Fees
Defendant argues that the trial court erred by awarding plaintiff attorney fees with respect
to legal services on its slander of title claim. Defendant does not contest the court’s award of
attorney fees to plaintiff regarding its quiet title claim because such an award is considered
“special damages” caused by defendant’s slander of plaintiff’s title. See B & B Investment
Group, supra at 9, and Sullivan, supra at 85. But defendant argues that there is no causal
connection to legal fees plaintiff incurred after it obtained its quiet title judgment. Further,
defendant argues that the award of attorney fees for plaintiff’s slander of title claim violates the
“American Rule” under which litigants are generally responsible for their own legal expenses.
We disagree that the “American Rule” precludes an award of attorney fees in this instance.
Because defendant does not assert that the trial court otherwise abused its discretion, we affirm
the trial court’s award of attorney fees to plaintiff.
Under the “American Rule,” attorney fees are generally not recoverable as an element of
costs or damages unless expressly provided for by statute, court rule, judicial exception, or by
contract. Dessart v Burak, 470 Mich 37, 42; 678 NW2d 615 (2004); Fleet Business Credit, LLC
v Krapohl Ford Mercury Co, 274 Mich App 584, 589; 735 NW2d 644 (2007). With respect to a
claim for slander of title, MCL 565.108 contains specific language permitting the trial court after
a finding of slander of title to “award the plaintiff all the costs of such action, including such
attorney fees as the court may allow to the plaintiff.” While the statute also refers to actions to
quiet title, the statute itself as discussed already, is a basis in addition to the common law for a
slander of title claim. Indeed, in B & B Investment Group, supra at 11, a statutory slander of title
case, this Court held that the statute’s grant of discretion to trial courts to award attorney fees to a
party prevailing on a slander of title claim was not limited to quiet title actions. The Court
opined:
The plain language of the statute does not limit the award of attorney fees and
grants the court discretion in awarding such fees; the statute states that “if the
court shall find that any person has filed a claim for that reason [to slander the
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title to land] only, he shall award the plaintiff all the costs of such action,
including such attorney fees as the court may allow.” The statute contemplates
recovery of attorney fees, at the court's discretion, expended in actions for slander
of title, not simply to quiet title. Further, even though the claims of interest were
discharged in late June 1992, the trial of the slander of title claim was not held
until November and December of 1993. And, while plaintiff did not prevail on
the separate damage issues at trial, it was entitled to proceed to trial of the slander
of title claim to recover the attorney fees and costs incurred as special damages
and in seeking to recover these amounts. [B & B Investment Group, supra at 11.]
Consequently, defendant’s argument regarding the trial court’s award of attorney fees
fails.
Last, defendant asserts the trial court erred by awarding as special damages for slander of
title $15,000 that plaintiff paid defendant for a quit claim deed in 2003. We disagree. As we
concluded in part II(E), defendant has failed by its argument and citation to the record to
convince us that the trial court clearly erred. Hill, supra at 308; Fowler, supra at 598.
Defendant first argues that plaintiff did not include the 2003 quit claim transaction as part
of its slander of title claim, and further, that only the recording of the 2005 amendatory
agreement could form the basis for plaintiff’s claim. Thus, defendant argues that filing the 2005
amendment could not possibly have been causally related to the 2003 transaction. We disagree
with both defendant’s premises. First, plaintiff included the $15,000 transaction in ¶ 28 of its
amended complaint for slander of title claim. Second, the essence of plaintiff’s slander of title
claim went beyond the mere recording of the 2005 amendment. Plaintiff stated the essence of its
slander claim in ¶ 15 of the amended complaint: despite its termination, defendant continued to
claim the seasonal parking easement in plaintiff’s property pursuant to the 1985 easement. Oral
disparagement of title will support a common-law slander of title claim. See, e.g., Harrison,
supra 477 (a lessor’s false statement to a prospective tenant that the lessee had no right to sublet
the premises for the purpose operating a saloon).
Next, defendant argues plaintiff cannot recover damages for the 2003 transaction because
the one-year statute of limitations for slander had expired before plaintiff filed its complaint on
December 7, 2005. See MCL 600.5805(9). Again, we disagree. Defendant did not plead the
limitations period as an affirmative defense. Rather, defendant pleaded that the 2003 transaction
either estopped plaintiff from asserting its slander claim or acted to revive the 1985 easement.
Defendant waived the application of the statute of limitations by failing to plead it as an
affirmative defense. See Walters v Nadell, 481 Mich 377, 389; 751 NW2d 431 (2008) (“a
defendant waives a statute of limitations defense by failing to raise it in his first responsive
pleading”).
Finally, there was evidence before the trial court from which it could find the elements of
slander of title, and that the slander was causally related to plaintiff paying $15,000. Defendant
asserted its easement claim at a critical point in plaintiff’s construction of Light Harbor.
Plaintiff’s principal testified that he could not delay construction to contest the claim and
therefore paid the $15,000 to make the problem “go away.” Further, although the trial court’s
findings are not entirely clear, it is apparent that the court found at a minimum that defendant had
constructive knowledge that the 1985 easement had been terminated at the time of the 2003
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transaction. Consequently, there was evidence that supports the trial court’s award to plaintiff of
$15,000 as special damages for slander of title. We are unconvinced clear error occurred.
G. Conclusion
For all the foregoing reasons, we affirm. Plaintiff, as the prevailing party, may tax costs.
MCR 7.219(A).
/s/ Jane E. Markey
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