Equity Funding, Inc. v. Vill. of Milford

Oakland Circuit Court LC No. 2020-182478-CB

Before: BORRELLO, P.J., and SHAPIRO and HOOD, JJ.

HOOD, J.

Plaintiff-appellant Equity Funding (Equity) appeals from an order dismissing its quiet title suit against lienholder defendant Village of Milford (Milford). Equity also sought a declaratory judgment as to its ownership and damages for slander of title. While the case was proceeding, the amount of the lien was paid in full, Milford released the lien and then moved to dismiss plaintiff's claims as moot since the property was no longer encumbered. The circuit court granted the motion and plaintiff appeals.

We affirm the dismissal of the quiet title and declaratory judgment claims on mootness grounds. And although we conclude that the claim for slander of title was not rendered moot, we nevertheless affirm its dismissal, though on different grounds than the circuit court; we conclude that Equity failed to raise its slander of title claim within the applicable period of limitations.

I. BACKGROUND

In 2004, non-party Milford Housing borrowed money from Equity. The loan was secured by certain real property on Peters Rd owned by Milford Housing including the Woodland Apartments building. The building was in poor condition and in 2009 Milford ordered its demolition. In 2010 Milford Housing defaulted on the loan. Equity initiated foreclosure proceedings and in December of that year it obtained a sheriff's deed to the property. Before the redemption period expired, however, Milford Housing filed for bankruptcy which stayed the demolition. Later, the parties agreed to partially lift the bankruptcy stay in order to allow Milford to demolish which ultimately took place in 2012. Bankruptcy was discharged in January 2018. Thereafter, Milford Housing failed to redeem the property and Equity acquired ownership of the

Peters Road property on July 24, 2018. In September 2018, Milford recorded the notice of demolition lien. In 2020, when Equity sought to sell the property it learned of the lien and filed this suit.

In its complaint, Equity alleged that it was the owner of the Peters Road property and that Milford's lien was illegitimate because (1) it was untimely filed, (2) the charges were not incurred against Equity, and (3) that the lien was filed against Milford Housing, not Equity. Equity sought an order quieting title; declaring that Equity is the owner of the property, Milford has no interest in the property, and the lien is void in violation of Michigan law; and enjoining Milford from prosecuting any action related to the lien. It also sought damages in excess of $25,000 based on its slander of title claim.

Eventually, Milford moved for summary disposition under MCR 2.116(C)(8) and (C)(10). Milford argued that Equity had failed to state a claim to quiet title or for slander of title because the lien was valid. Milford explained that Equity was aware that the building was dangerous and Equity had consented to lift the bankruptcy stay to allow its demolition. According to Milford, the demolition cost constituted a lien against the property analogous to a tax lien, and not a personal construction lien, against Milford Housing. Milford asserted there was no question of fact that it was entitled to place a lien against the property for the demolition costs and, thus, the court should grant judgment in its favor.

Equity responded by filing a motion for partial summary disposition in its favor with regard to its quiet title and declaratory judgment counts under MCR 2.116(C)(7), (8), and (10). It argued that the lien was invalid because Milford recorded it without first giving Equity adequate notice or an opportunity to be heard with respect to the demolition process, depriving Equity of due process. Equity asserted that while Milford notified Milford Housing of the proceedings and complied with the statute requiring notice, Milford should have gone beyond its statutory obligations because it knew that Equity had an interest in the property. Equity also argued that the lien was barred by the doctrine of laches because Milford had unreasonably delayed in recording it.

While these cross-motions were pending, Equity's title insurance company issued a check to Milford in the amount of $28,902.08 to satisfy the lien. Milford apparently accepted the check and recorded a satisfaction of lien to release the demolition lien. Milford informed the circuit court of these facts in its reply brief in support of its motion for summary disposition. Milford argued that Equity's claims were now moot because the lien had been satisfied and released.

Shortly after Milford filed its reply brief, the circuit court sua sponte waived oral argument and granted summary disposition in Milford's favor. The circuit court found that Equity had paid $28,902.08 to satisfy the demolition lien and that Milford had received the payment and executed a release of the lien.^[1] Consequently, the circuit court concluded that Equity's "claims for quiet

title and slander of title are moot, and an 'actual controversy' no longer exists in this matter, which is a condition precedent to invoking declaratory relief under MCR 2.605(A)(1)[.]" Accordingly, the circuit court dismissed Equity's entire complaint under MCR 2.116(C)(10). Equity moved for...