PULLUM WINDOW CORP V RANDY M DEPREZ CUSTOM BUILDER INC
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STATE OF MICHIGAN
COURT OF APPEALS
PULLUM WINDOW CORP.,
UNPUBLISHED
December 21, 2010
Plaintiff,
V
RANDY M. DEPREZ CUSTOM BUILDER,
INC., RANDY M. DEPREZ, DEBORAH
DEPREZ, DEPREZ-PASCOE INVESTMENTS,
INC., RITA A. PASCOE LIVING TRUST,
COMMUNITY BANK OF DEARBORN,
No. 294335
Oakland Circuit Court
LC No. 2008-093505-CH
Defendants,
and
FIDELITY BANK,
Defendant/Third-Party
Plaintiff/Appellant,
v
PHILIP F. GRECO TITLE COMPANY,
Third-Party Defendant,
and
CHICAGO TITLE INSURANCE COMPANY,
Third-Party Defendant/Appellee.
Before: DONOFRIO, P.J., and CAVANAGH and FITZGERALD, JJ.
PER CURIAM.
Defendant/Third-Party Plaintiff/Appellant, Fidelity Bank, appeals as of right the trial
court’s grant of summary disposition in favor of Third-Party Defendant/Appellee, Chicago Title
Insurance Company (Chicago Title), in the action involving a title insurance contract. Because
the language of the title insurance contract was clear and unambiguous, Fidelity Bank has not
presented a question of material fact on this record, and we affirm.
-1-
The real property involved in this matter is a site condominium development called the
Paint Creek Country Club Estates (Paint Creek) located in Oxford, Michigan. Paint Creek
Development Group, LLC originally began construction on certain site condominiums within
Paint Creek in 2003. On November 9, 2005, Deprez-Pascoe Investments, Inc. (Deprez-Pascoe)
purchased 17 condominium units in Paint Creek from the Paint Creek development Group, LLC.
The 17 units were identified as follows: 3, 9, 16, 19, 25, 31, 34, 35, 45, 55, 72, 80, 85, 87, 90, 93,
and 96. Deprez-Pascoe financed the purchase via a mortgage it secured from Fidelity Bank1 in
the amount of $1,907,600. In furtherance of the loan transaction, Fidelity Bank procured a
commitment for title insurance from Chicago Title. The title insurance policy identifies Chicago
Title as the insurer, Fidelity Bank as the insured, the date of the title insurance policy as
December 6, 2005, and the amount of title insurance as $1,907,600. The title policy language
states as follows in relevant part:
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS
FROM COVERAGE CONTAINED IN SCHEDULE B AND THE
CONDITIONS AND STIPULATIONS, CHICAGO TITLE INSURANCE
COMPANY, a Missouri corporation, herein called the Company, insures, as of
Date of Policy shown in Schedule A, against loss or damage, not exceeding the
Amount of Insurance stated in Schedule A, sustained or incurred by the insured
by reason of:
***
7 Lack of priority of the lien of the insured mortgage over any statutory lien for
services, labor or material:
(a) arising from an improvement or work related to the land which is
contracted for or commenced prior to Date of Policy; or
(b) arising from an improvement or work related to the land which is
contracted for or commenced subsequent to Date of Policy and which
is financed in whole or in part by proceeds of the indebtedness secured
by the insured mortgage which at Date of Policy the insured has
advanced or is obligated to advance
***
The Company will also pay the costs, attorneys’ fees and expenses incurred in
defense of the title or the lien of the insured mortgage, as insured, but only to the
extent provided in the Conditions and Stipulations.
1
At the time of the transaction, Community Bank of Dearborn granted the mortgage, however,
now, Community Bank of Dearborn is known as Fidelity Bank.
-2-
Thereafter, four separate companies recorded construction liens against Unit 31. Stock
Building Supply recorded its construction lien on August 3, 2007 in the amount of $72,862.14
and noted that it first provided labor or material for an improvement at Unit 31 on April 13,
2007. Norco Contracting Inc. recorded its construction lien on October 19, 2007 in the amount
of $7,130.00 and noted that it first provided labor or material for an improvement at Unit 31 on
June 5, 2007. Smede-Son Steel recorded its construction lien on August 7, 2007 in the amount
of $5,247.11 and noted that it first provided labor or material for an improvement at Unit 31 on
April 6, 2007. Pullum Window Corp. recorded its construction lien on August 15, 2007 in the
amount of $24,347.73 and noted that it first provided labor or material for an improvement at
Unit 31 on May 31, 2007.
In January 2008, Stock Building sought to foreclose its construction lien. Norco
Contracting and Smede-Son Steel both followed suit asserting cross-claims to foreclose their
own liens. Fidelity Bank submitted a claim to Chicago Title under the title insurance policy in
February 2008. The following month Chicago Title denied the claim citing the policy language
and indicating that the lien claimants provided the subject work and materials post-policy.
Before the parties to the foreclosures began discovery, Fidelity Bank settled with the Stock
Building Supply, Norco Contacting, and Smede-Son Steel.2
Several months later, in August 2008, Pullum Window Corp. instituted litigation to
foreclose its construction lien. Fidelity Bank again submitted a claim to Chicago Title under the
title insurance policy that Chicago Title again denied stating that Pullum Window Corp first
provided labor and services post-policy and therefore the lien was excluded from coverage.
Shortly thereafter, Fidelity Bank filed a third-party complaint against Chicago Title alleging
several counts including breach of contract, promissory estoppel, specific performance, and
declaratory judgment. The trial court granted summary disposition in favor of Chicago Title on
all counts. As a result, Fidelity Bank settled with Pullum Window Corp. in the amount of
$24,347.73. Fidelity Bank now appeals as of right.
We review a motion for summary disposition de novo. Robertson v Blue Water Oil Co,
268 Mich App 588, 592; 708 NW2d 749 (2005). A trial court should grant a motion brought
pursuant to MCR 2.116(C)(10) when there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Miller v Purcell, 246 Mich App 244, 246; 631
NW2d 760 (2001). The nonmoving party may not rest on mere allegations or denials in the
pleadings, but must, by documentary evidence, set forth specific facts showing there is a genuine
issue for trial. Quinto v Cross & Peters Co, 451 Mich 358, 362; 547 NW2d 314 (1996). A
genuine issue of material fact exists when the record, drawing all reasonable inferences in favor
of the nonmoving party, leaves open an issue upon which reasonable minds could differ. West v
GMC, 469 Mich 177, 183; 665 NW2d 468 (2003). When deciding a motion for summary
disposition under this rule, a court must consider the pleadings, affidavits, depositions,
2
Fidelity Bank paid Stock Building Supply $63,000, Norco Contacting $4,991, and Smede-Son
Steel $3,936.
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admissions, and other documentary evidence then filed in the action or submitted by the parties
in the light most favorable to the nonmoving party. MCR 2.116(G)(5); Ritchie-Gamester v City
of Berkley, 461 Mich 73, 76; 597 NW2d 517 (1999). A question of fact exists when reasonable
minds can differ on the conclusions to be drawn from the evidence. Glittenberg v Doughboy
Recreational Industries (On Rehearing), 441 Mich 379, 398-399; 491 NW2d 208 (1992).
“An insurance policy is much the same as any other contract. It is an agreement between
the parties in which a court will determine what the agreement was and effectuate the intent of
the parties.” Auto-Owners Ins Co v Churchman, 440 Mich 560, 566; 489 NW2d 431 (1992). An
insurance contract should be read as a whole, with meaning given to all terms. Royal Prop
Group, LLC v Prime Ins Syndicate, Inc, 267 Mich App 708, 715, 706 N.W.2d 426 (2005). A
clear and unambiguous contractual provision is to be enforced as written. Coates v Bastian Bros,
Inc, 276 Mich App 498, 503; 741 NW2d 539 (2007). “Clear and unambiguous language may
not be rewritten under the guise of interpretation[.]” South Macomb Disposal Auth v American
Ins Co (On Remand), 225 Mich App 635, 653; 572 NW2d 686 (1997). And, “[c]ourts must be
careful not to read an ambiguity into a policy where none exists.” Auto-Owners Ins Co v
Harvey, 219 Mich App 466, 469; 556 NW2d 517 (1996).
Fidelity Bank first argues that the trial court erred when it held that the title insurance
policy provided no insurance coverage for liens for services, labor, or materials. Chicago Title
responds that the clear and unambiguous language of the title policy states that construction liens
are covered only if they arise from work contracted for or commenced before the effective date
of the policy and thus, the construction lien at issue is not within the scope of coverage. Again,
the relevant title policy language states as follows:
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS
FROM COVERAGE CONTAINED IN SCHEDULE B AND THE
CONDITIONS AND STIPULATIONS, CHICAGO TITLE INSURANCE
COMPANY, a Missouri corporation, herein called the Company, insures, as of
Date of Policy shown in Schedule A, against loss or damage, not exceeding the
Amount of Insurance stated in Schedule A, sustained or incurred by the insured
by reason of:
***
7 Lack of priority of the lien of the insured mortgage over any statutory lien for
services, labor or material:
(a) arising from an improvement or work related to the land which is
contracted for or commenced prior to Date of Policy; or
(b) arising from an improvement or work related to the land which is
contracted for or commenced subsequent to Date of Policy and which
is financed in whole or in part by proceeds of the indebtedness secured
by the insured mortgage which at Date of Policy the insured has
advanced or is obligated to advance . . . .
-4-
The date of the title insurance policy is December 6, 2005. Section 7(b) is inapplicable to
the circumstances of this case. The record evidence indicates that Fidelity Bank fully disbursed
the mortgage proceeds at closing on November 9, 2005 and that those proceeds were used to
acquire the land, not to make improvements to the land. Furthermore, Christopher E. Westphal,
vice president at Fidelity Bank, explicitly testified at his deposition that the loan proceeds were
not used to finance the improvements that are the subject of the four constructions liens.
With regard to section 7(a), Chicago Title provides evidence that all four liens at issue
state explicitly that the lien claimants first provided labor or material at Unit 31 after December
6, 2005. Stock Building Supply’s lien states that it first provided labor or material for an
improvement at Unit 31 on April 13, 2007. Norco Contracting Inc.’s lien states that it first
provided labor or material for an improvement at Unit 31 on June 5, 2007. Smede-Son Steel’s
lien stated that it first provided labor or material for an improvement at Unit 31 on April 6, 2007.
Pullum Window Corp.’s lien stated that it first provided labor or material for an improvement at
Unit 31 on May 31, 2007. Additionally, there is record evidence that Randy Deprez Custom
Homes, Inc. contracted for trusses from Stock Building Supply on April 9, 2007 and windows
from Pullum Window Corp. on April 26, 2007. There is no record evidence regarding when
Randy Deprez Custom Homes, Inc. or anyone else contracted for labor or materials from either
Norco Contracting Inc. or Smede-Son Steel.
Furthermore, Chicago Title refers us to Section 6 of the Exclusions from Coverage
portion of the title insurance policy which states as follows:
6. Any statutory lien for services, labor or materials (or the claim of priority of
any statutory lien for services, labor or materials over the lien of the insured
mortgage) arising from an improvement or work related to the land which is
contracted for and commenced subsequent to Date of Policy and is not financed in
whole or in part by proceeds of the indebtedness secured by the insured mortgage
which at Date of Policy the insured has advanced or is obligated to advance.
Chicago Title asserts that the language in the exclusionary clause is clear and unambiguous and
thus, insurance coverage relating to the four construction liens is not only outside the scope of
the insuring provisions but also expressly excluded by Section 6 of the Exclusions from
Coverage portion of the title insurance policy.
Fidelity Bank as the nonmoving party may not rest on mere allegations or denials in the
pleadings, but must, by documentary evidence, set forth specific facts showing there is a genuine
issue for trial with regard to the evidence showing that labor or materials were first furnished, or
contracted for, prior to the date of the contract, December 6, 2005. Quinto, 451 Mich at 362. In
that vein, Fidelity Bank has provided documentation in the form of a permit history report issued
by the Charter Township of Oxford Building Department with regard to Unit 31. The report lists
the project as “LOT 31, NEW HOME CONSTRUCTION, PAINT CREEK COUNTRY CLUB.”
The report shows the owner as Randy Deprez, the contractor as Randy Deprez Custom Builder
Inc., and the type of project as residential. It is undisputed that the condominium units in Paint
Creek were site condominiums. The report shows that the Township of Oxford completed four
inspections on Unit 31 between May 13, 2003 and October 21, 2003, prior to the date of the title
insurance policy, December 6, 2005:
-5-
Date
Inspector
Type
Result
Type/Description
Result
Description
5/13/2003
Tim
Berger
B11
001
Post Hole Or Trench Footing
OK-Passed
1. TOP SOIL@ INTERIOR
OF HOUSE MUST BE
REMOVED BEFORE
[PLACING OF] SLAB
5/15/2003
Tim
Berger
B10
001
Basement Footing
OK-Passed
6/2/2003
Tim
Berger
B20
001
Backfill
OK-Passed
1. GARAGE LEAD WALL
MAY BE VIOLATING SIDE
YARD SETBACK.
2. SURVEYOR
VERIFICATION OF
PLACEMENT REQUIRED.
3. BACKFILL MAY BE
PLACED AFTER
CERTIFICATION OF SIDE
YARD SETBACK.
10/21/2003 Tim
Berger
B11
001
Post Hole or Trench Footing
OK-Passed
This report seems to indicate that physical improvements to the real property at Unit 31
occurred prior to the date of the mortgage issued by Fidelity Bank on November 9, 2005 as well
as prior to the date Chicago Title issued the title insurance policy, December 6, 2005. Fidelity
Bank uses the information contained in this report to support its assertion that its claims against
Chicago Title “ultimately relate to the priority of Plaintiff Fidelity’s Mortgage as compared to
the four Subject Construction Liens.” In order to advance this contention, Fidelity Bank recalls
the well-established principle that a construction lien arising under the Construction Lien Act
relates back to the date of the first actual physical improvement to the property and has priority
over all interests recorded after the first actual physical improvement. MCL 570.1119(3); MD
Marinich, Inc v Nat’l Bank, 193 Mich App 447, 454; 484 NW2d 738 (1992).
But Fidelity Bank’s argument is merely a smokescreen. This case is not about whether
the four construction liens had priority over Fidelity Bank’s mortgage under the statutory
mandates of the Construction Lien Act—Fidelity Bank sought redress for breach of contract in
its complaint. This case is only about the interpretation of the insurance agreement at issue. For
-6-
purposes of lien priority under the Construction Lien Act, indeed, the information presented in
the Township of Oxford Building Department report would be probative evidence of the relation
back principle. The report shows that basement footings were inspected and approved by the
Township as of June 2, 2003. Thus, logic dictates that the basement footings must have been in
place at Unit 31 at that time. Hence, the report might indicate that the four construction liens had
priority over the mortgage because they may “relate back” to other, earlier, actual physical
improvements made at Unit 31 before Fidelity Bank recorded its mortgage. MCL 570.1119(3);
MD Marinich, Inc, 193 Mich App 454.3 But, for purposes of negotiated title insurance coverage
at issue in this case, we decline to overlay the relation back principle of the Construction Lien
Act on the parties’ insurance contract. As such, because the relation back principle of the
Construction Lien Act has no bearing on the dates at issue in this case, all four construction liens
are clear that the lien claimants first provided labor or material at Unit 31 after December 6,
2005. Therefore insurance coverage relating to the four construction liens is outside the scope of
the insuring provisions as well as expressly excluded from coverage in the contract.
Fidelity Bank also asserts in its brief on appeal that the title insurance policy was not
issued in accordance with the commitment. Fidelity Bank requests that Chicago Title be
required to specifically perform so as to issue a title insurance policy that does not except from
coverage “any lien or right to a lien for services, labor, or material heretofore or hereafter
furnished, imposed by law and not shown of (sic) the public records.” Fidelity Bank also
requests that the Court grant relief on its promissory estoppel claim and enforce “Chicago’s
promise to provide coverage . . . to avoid injustice.” But the record belies Fidelity Bank’s claim
that the title insurance policy was not issued in accordance with the commitment. Westphal
testified that the title insurance policy issued by Chicago Title was “appropriately issued
3
This Court in MD Marinich, 193 Mich App 458-459, contemplated situations where lenders in
the construction finance industry “would not risk subordinating their mortgage interests to lien
claimants who are not known at the time a loan is made but are able to relate their liens back to
the date of the first actual physical improvement on the project.” The Court stated that:
While we agree . . . that there is a potential risk for lenders contemplating the
financing of construction projects, there is an adequate remedy afforded such
lenders by the Construction Lien Act, MCL 570.1119(4) which provides for the
recording of the mortgage interest before the first actual physical improvement is
made. In addition, advances made by mortgage lenders after the first actual
physical improvement is made may still enjoy priority over construction liens
under MCL 570.1119(4) if the mortgagee has received a sworn statement from
the contractor pursuant to MCL 570.1110. [Id.]
It would certainly seem unfair in this situation and others like it to simply transfer the lender’s
potential risk to the title insurance company, especially where (1) the Construction Lien Act
provides adequate remedies to lenders, and, (2) title insurance companies may contract out of the
risk, as Chicago Title has done here.
-7-
pursuant to the commitment” and that Fidelity Bank never objected to the form of the policy that
was issued. Fidelity Bank has not shown error and is not entitled to specific performance or
relief on its promissory estoppel claim.
Affirmed. Chicago Title, being the prevailing party, may tax costs pursuant to MCR
7.219.
/s/ Pat M. Donofrio
/s/ Mark J. Cavanagh
/s/ E. Thomas Fitzgerald
-8-
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