Petersen Fin., LLC v. Twin Creeks, LLC.

318 Mich.App. 48

896 N.W.2d 63

PETERSEN FINANCIAL, LLC

v.TWIN CREEKS, LLC.

Docket Nos. 329019

329622.

Court of Appeals of Michigan.

Submitted Nov. 1, 2016, at Grand Rapids.

Decided Nov. 22, 2016, at 9:00 a.m.

Visser and Associates, PLLC, Grand Rapids (by Ken Bauman and Donald R. Visser ), for Petersen Financial, LLC.

Burns Law Office, PLC (by Daniel L. Burns), for Jim Schaefer and Jill Schaefer.

Before: SAWYER, P.J., and MARKEY and O'BRIEN, JJ.

PER CURIAM.

In Docket No. 329019, plaintiff appeals from the trial court's grant of summary disposition in favor of defendants on plaintiff's claims of slander of title and tortious interference with a business expectancy. In Docket No. 329622, defendants James and Jill Schaefer appeal from the trial court's grant of summary disposition in favor of plaintiff on plaintiff's claim to quiet title; defendants specifically appeal the court's decision that certain deed restrictions do not apply to their property. We affirm.

This dispute involves a parcel of land located in the Twin Creeks development in Cannon Township in Kent County. The time line begins in 2000 when defendant Twin Creeks Development, LLC,¹ owned all the lots in the development. Thereafter, the following relevant events occurred:

• In 2002, most of the lot at issue in this case was conveyed by Twin Creeks Development to Carla Wolterstorff, with the remainder of the lot conveyed in 2004.

• In 2006, Twin Creeks, LLC,² recorded a document entitled "Deed Restrictions" covering all the lots in the development; the date on the document suggests that it had been executed four years earlier, in 2002.

• Carla Wolterstorff lost the lot due to a tax lien, and the Kent County Treasurer obtained title early in February 2011.

• Plaintiff purchased the lot at a foreclosure sale in September 2011.

The individual defendants, the Schaefers and the Burghgraefs, own parcels within the development.³ According to plaintiff, it was unaware of the deed restrictions when it purchased the property, but when it listed the property for sale, Gary Burghgraef sent an e-mail to plaintiff's real estate agent notifying the agent that the property was subject to deed restrictions. Additionally, according to an affidavit by plaintiff's real estate agent, she had been "contacted several times by the Defendants in this matter who informed me that there were deed restrictions on Plaintiff's property and that they intended to enforce those restrictions." The real estate agent passed this information along to prospective buyers, who lost interest in the property as a result.

On the basis of defendants' conduct, plaintiff filed the instant action. Ultimately, the trial court granted summary disposition in favor of defendants on plaintiff's claim for slander of title. The trial court opined as follows:

In order to prevail on a common-law slander of title claim, a plaintiff must prove "that the defendant maliciously published false statements that disparaged a plaintiff's right in property, causing special damages." Fed. Nat. Mortg. Ass'n v. Lagoons Forest Condo. Ass'n, 305 Mich.App. 258, 270, 852 N.W.2d 217 (2014).

The dispositive issue here is the publication requirement. Plaintiff has produced no evidence that Defendants made comments or other communications regarding the deed restrictions to anyone other than Plaintiff and Plaintiff's real estate agent[ ]. "Publication to an agent of the plaintiff who is acting at plaintiff's behest and on his behalf is tantamount to a publication to the plaintiff himself, and as such does not fulfill the publication requirement." Delval v. PPG Indus., Inc., 590 N.E.2d 1078, 1081 (Ind.App.1992).

Since Plaintiff cannot satisfy the publication requirement, its slander of title claim fails and must be dismissed as to all Defendants.

Plaintiff argues on appeal (Docket No. 329019) that the trial court's reliance on Delval was misplaced because it contradicts Michigan law. In this respect, plaintiff relies on this Court's decision in Ball v. White, 3 Mich.App. 579, 584, 143 N.W.2d 188 (1966), in which we stated:

Defendant further contended that there was no publication of the letter to a third party. However, the transmission of the letter to the employer, Mr. Ball, was a publication. All that is necessary for a publication to exist is the delivery of the defamatory matter to any person other than the one libeled. Our Supreme Court has held that:

"If a person compose a libel and send it to his agent, to be read by him, and it reaches its destination and is read by such agent, it is sufficient publication to support the action." Bacon v. Michigan C.R. Co. (1884), 55 Mich. 224, 228 (54 Am.Rep. 372 ).

But neither Ball, nor the case it relies on, Bacon, is on point. Ball involved a situation in which the defendant published the defamatory statement not to the plaintiffs' agent, but to the plaintiffs' employer. Ball, 3 Mich.App. at 581–582, 143 N.W.2d 188. In Bacon, as Ball 's quotation from Bacon reflects, the defamatory statement was published not to the plaintiff's agent, but to the defendant's own agent. Thus, neither dealt with the situation here, a publication to plaintiff's agent.

We find the reasoning in Delval, as adopted by the trial court, to be persuasive. Under these circumstances, publication to plaintiff's agent was the equivalent of publication to plaintiff itself and did not satisfy the publication requirement. Furthermore, we are not persuaded by plaintiff's argument that a different result should be reached because of the real estate agent's obligation to disclose the information to third parties—that is, the potential buyers. Indeed, part of plaintiff's argument only makes the case for why we should follow Delval. Plaintiff points to MCL 565.957 and a seller's obligation to disclose a number of things about the property, including whether there is "a homeowners' association that has any authority over the property[.]" In other words, not only would the real estate agent have a duty to disclose, so would the seller.⁴ This reinforces the applicability of the principle in Delval; because the seller possessed the information, the seller was obligated to disclose it through the agent to any potential buyer. That is, making the claim regarding the alleged deed restrictions to plaintiff's real estate agent caused no further harm than making the claim to plaintiff itself.

Defendants raise a number of other arguments regarding why they were entitled to summary disposition, but the trial court did not address these arguments. In any event, in light of our resolution of this issue on the basis of the lack of publication to a third party, we need not address these additional arguments.⁵

We now turn to defendants' appeal (Docket No. 329622), which argues that the trial court erred by granting summary disposition in favor of plaintiff on the quiet-title claim. The trial court concluded that the deed restrictions do not apply for the following reasons:

There are a number of reasons why the Deed Restrictions do not encumber the lot as a restrictive covenant. First, the majority of the lot was conveyed to Carla Woltersto[r]ff prior to the Deed Restrictions being recorded—or even executed. Second, the remainder of the lot was conveyed to Carla Woltersto [r]ff before the Deed Restrictions were recorded. Third, the Deed Restrictions were executed and recorded by Twin Creeks, LLC, which never held an interest in Plaintiff's lot, let alone at the time it executed or recorded the Deed Restrictions. Based on all of this, the Deed Restrictions were clearly outside the lot's chain of title, and a document recorded outside the chain of title cannot affect the interest of a person within the chain of title. Bristol v. Braidwood, 28 Mich. 191, 193 (1873).

The trial court also rejected defendants' argument that, even if not effective as deed restrictions, the restrictions qualified as a reciprocal negative easement:

Defendants maintain that even if the Deed Restrictions do not qualify as a restrictive covenant, Plaintiff's lot is still encumbered by a reciprocal negative easement. In order to create a reciprocal negative easement, there must be (1) a common owner, (2) a general plan, (3) and the common owner must have conveyed other lots with express restrictions in those deeds before conveying the lot at issue. Sanborn v. McLean, 233 Mich. 227, 230, 206 N.W. 496 (1925). "Thus, the implied restriction arises from the express restriction." Civic Ass'n of Hammond Lake Estates v. Hammond Lake Estates No. 3 Lots 126–135, 271 Mich.App. 130, 137, 721 N.W.2d 801 (2006). "Reciprocal negative easements are never retroactive." Sanborn, 233 Mich. at 230 [206 N.W. 496]. Also, the party seeking to establish the existence of a reciprocal negative easement bears the burden of proof. Grant v. Craigie, 292 Mich. 658, 662, 291 N.W. 44 (1940).

While Defendants can clearly establish that there was a common owner, and perhaps even show that the common owner had a general plan, they have provided no evidence that any lots were conveyed with express deed restrictions prior to Carla Woltersto[r]ff taking title to Plaintiff's lot in 2001. Defendants have also failed to provide any evidence that lots were conveyed with express deed restrictions prior to Carla Woltersto[r]ff obtaining title to the remaining 200 feet of Plaintiff's lot in 2004. Consequently, Defendants have failed to establish a genuine issue of material fact that a reciprocal negative easement exists, and Plaintiff is entitled to judgment as a matter of law on Count I.

Turning first to the issue of the deed restrictions themselves, we note that defendants make no argument that deed restrictions filed outside the chain of title are enforceable. Rather, defendants raise a number of equitable claims, none of which is persuasive.

First, defendants argue that Wolterstorff acquiesced to the deed restrictions. Defendants cite only a case from this Court, B.P.A. II v. Harrison Twp., 73 Mich.App. 731, 252 N.W.2d 546 (1977),...