McFerren v. B & B. INV. GROUP

• Decision Date: 23 January 2003
• Docket Number: Docket No. 230289.
• Citation: 253 Mich. App. 517,655 N.W.2d 779
• Parties: Charles McFERREN, Plaintiff/Counterdefendant-Appellant, v. B & B INVESTMENT GROUP, Defendant/Counterplaintiff-Appellee, and Emma Jean McFerren and Alan Applebaum, Defendants.
• Court: Court of Appeal of Michigan — District of US

655 N.W.2d 779

253 Mich. App. 517

Charles McFERREN, Plaintiff/Counterdefendant-Appellant, v. B & B INVESTMENT GROUP, Defendant/Counterplaintiff-Appellee, and Emma Jean McFerren and Alan Applebaum, Defendants.

Docket No. 230289.

Court of Appeals of Michigan.

Submitted September 5, 2002, at Detroit.

Decided October 22, 2002, at 9:15 a.m.

Rehearing Denied January 23, 2003.

Alan C. Applebaum, Southfield, for the plaintiff.

Sills, Law, Essad, Fiedler & Charboneau, P.C. (by Ernest J. Essad, Jr. and Susan R. Czapski), Bloomfield Hills, for the defendant.

Before: METER, P.J., and SAAD and R.B. BURNS¹, JJ.

PER CURIAM.

Plaintiff appeals as of right from a judgment dismissing his complaint to quiet title. We affirm.

In a prior appeal, this Court remanded this case for further proceedings after concluding that an arbitrator was without jurisdiction to decide the parties' quiet-title claims. McFerren v. B & B Investment Group, 233 Mich.App. 505, 592 N.W.2d 782 (1999). The factual background of this case is set forth in this Court's prior opinion as follows:

This case arises from a dispute over the ownership of real property located at 5256 Potomac Run East, in West Bloomfield, Michigan. Plaintiff purchased the property on January 10, 1986, from Wayne and Sandra Miller for $92,500. The Millers executed a warranty deed to plaintiff, but plaintiff never recorded the deed. Plaintiff paid the purchase price with a series of checks that were each less than $10,000. However, he failed to pay the real estate taxes or the condominium association fees due on the property.

In the summer of 1990, defendant bought the property at a tax sale from the Oakland County Treasurer and received a tax deed. Later that summer, defendant sought and received a quitclaim deed from the Millers in exchange for $25,000. Defendant recorded its quitclaim deed on August 31, 1990. Plaintiff later recorded an affidavit in the record title to the property referring to the 1986 deed conveying the property to him.

Plaintiff filed a complaint against defendant on May 3, 1991, alleging that defendant was not a bona fide purchaser without notice; therefore, defendant's quitclaim deed should be quashed and title should be quieted in plaintiff's favor. The parties later stipulated to submit the case to arbitration in 1992, and the trial court entered an order referring the case to arbitration. However, the appointed arbitrator died before arbitration and neither party pursued the case while another action involving the parties proceeded through the trial and appellate stage.

In December 1996, the trial court granted defendant's motion to reopen the case. Defendant filed a counterclaim and a cross-claim to quiet title on January 13, 1997. On February 3, 1997, the trial court entered an order appointing a new arbitrator and submitting the matter to arbitration, which order was signed by both parties. After a hearing, the arbitrator issued his opinion and judgment ordering the sale of the property and an equitable division of the proceeds. The arbitrator relied on equitable principles and noted that plaintiff did not have "clean hands" because he did not record the deed in an apparent attempt to prevent his wife and the United States government from discovering he owned the property. The arbitrator ordered that defendant receive the first $83,000 from the net proceeds of the sale of the property, that the next $30,000 plus interest be distributed to plaintiff's attorney, who had a valid mortgage on the property for legal services rendered to plaintiff, and that the balance of the proceeds be distributed to plaintiff.

After the arbitrator filed his opinion and judgment, plaintiff moved in the trial court to set aside the opinion and judgment on two grounds. First, plaintiff argued although the parties had agreed to arbitrate the dispute, arbitration was precluded by M.C.L. § 600.5005, which prohibits submitting any issue involving fee ownership of real estate to arbitration. In the alternative, plaintiff argued the arbitrator exceeded his authority when instead of determining whether plaintiff or defendant owned the property, he ordered the property sold and the proceeds of the sale divided.

The trial court denied plaintiff's motion to set aside the arbitrator's opinion and judgment, recognizing the state's strong policy favoring arbitration and relying on the fact that plaintiff stipulated and actively participated in arbitration. The trial court held plaintiff could not wait until he knew the outcome of the arbitration to object. The trial court also held M.C.L. § 600.5005 did not apply because the arbitrator did not determine the fee interests of the parties, but instead ordered the property sold and the proceeds of the sale divided. Moreover, the trial court rejected plaintiff's claim that the arbitrator exceeded his authority by fashioning an equitable remedy different than what the parties had requested.

After the trial court denied plaintiff's motion to set aside the arbitrator's opinion and judgment, defendant filed a "Motion for Judgment to Clear Title and for Sale of Property Pursuant to Arbitration Award." The trial court granted defendant's motion and entered a judgment that ordered the property sold and the net proceeds divided pursuant to the arbitrator's opinion and judgment. Plaintiff then filed a postjudgment motion to modify the judgment, which the trial court denied. Plaintiff appealed. [McFerren, supra at 506-509, 592 N.W.2d 782.]

Although recognizing "that it may appear inequitable to allow plaintiff to wait until the outcome of the arbitration to raise his challenge to the arbitrator's authority," this Court noted that "a party may challenge the subject-matter jurisdiction of a court at any time." Id. at 512, 592 N.W.2d 782. Moreover, "subject-matter jurisdiction cannot be conferred on a court by consent of the parties." Id. at 513, 592 N.W.2d 782. This Court determined that the arbitrator "was without jurisdiction to decide the dispute presented to him," vacated the judgment of the trial court, and "[r]eversed and remanded for further proceedings not inconsistent with this opinion." Id. at 511, 513, 592 N.W.2d 782.

On remand, following a bench trial, the trial court found that plaintiff purchased the subject property on January 10, 1986, from Wayne and Sandra Miller, but did not record the deed. On May 2, 1989, defendant B & B Investments purchased the property at a tax sale of the 1986 taxes for approximately $2,240.81, thereby becoming the owners, subject to a six-month right of redemption. Because of a government lien on the property, defendants subsequently sent both Linda Burgess, who occupied the property, and plaintiff a notice of redemption. Title searches did not reveal any title in plaintiff, and a tax search revealed that the taxes were still being billed to the Millers. The condominium association fees remained in the Millers' names. Thereafter, defendant received a quitclaim deed from the Millers in exchange for $9,900 so that it would not have to wait the six-month redemption period. Approximately two weeks before the transfer by the Millers to defendant, a Drug Enforcement Administration (DEA) lien was discharged. Plaintiff brought this suit to quiet title to his interest in the property now claimed by defendant.

The trial court observed that an action to quiet title was equitable in nature and that all equitable doctrines, including the clean hands doctrine, applied. Plaintiff had answered interrogatories in his divorce case and stated under oath that he rented the property and did not own it. He also sold his interest to Linda Burgess under a land contract when he knew that he had not perfected his ownership in the property by recording a deed. Plaintiff did not pay any taxes on the property and did not have the county treasurer send the tax bills to him. Nor did he pay his condominium association assessments. In the deed that he received from the Millers, plaintiff indicated that he was a single man when in fact he was still married, albeit separated. Plaintiff also allowed an affidavit signed by someone else to be filed with the Register of Deeds. Because plaintiff had unclean hands, the court found that he was not entitled to the relief he requested and, accordingly, dismissed his suit to quiet title.

On appeal, plaintiff argues that the trial...