Equity Funding, Inc. v. Vill. of Milford

• Docket Number: 357062
• Decision Date: 21 July 2022
• Citation: 994 N.W.2d 859,342 Mich. App. 342
• Parties: EQUITY FUNDING, INC., Plaintiff-Appellant, v. VILLAGE OF MILFORD, Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

342 Mich.App. 342

994 N.W.2d 859

EQUITY FUNDING, INC., Plaintiff-Appellant, v. VILLAGE OF MILFORD, Defendant-Appellee.

No. 357062

Court of Appeals of Michigan.

Submitted May 4, 2022, at Detroit.

Decided July 21, 2022, 9:05 a.m.

Aubrey H. Tobin, West Bloomfield, for Equity Funding, Inc.

Kerr, Russell and Weber, PLC, Detroit (by Joanne Geha Swanson and Kevin A. McQuillan ) for the Village of Milford.

Before: Borrello, P.J., and Shapiro and Hood, JJ.

Hood, J. Plaintiff-appellant, Equity Funding, Inc.(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 Milford then moved to dismiss plaintiff's claims as moot since the property was no longer encumbered.The circuit court granted the motion, and Equity 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, nonparty Milford Housing, LLC, borrowed money from Equity.The loan was secured by certain real property on Peters Road 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 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) 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.Equity also sought damages in excess of $25,000 on the basis of 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 that 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 that 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 moving 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 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.¹Consequently, 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 reconsideration, asserting that Milford had "purposefully and clearly misrepresented" facts, most notably that it was Equity that paid off the lien.The circuit court denied the motion.This appeal followed.

II.MOOTNESS

Equity asserts that the circuit court erred by granting summary disposition on mootness grounds because this issue was raised for the first time in a reply brief, thereby denying Equity an opportunity to respond to the issue.We disagree.

"Issues involving mootness are questions of law that are reviewed de novo."Adams v. Parole Bd. , 340 Mich.App. 251, 259; 985 N.W.2d 881(2022).This Court also reviews de novo actions to quiet title.Beach v. Lima Twp. , 489 Mich. 99, 106, 802 N.W.2d 1(2011)."Questions of law relative to declaratory judgment actions are reviewed de novo, but the trial court's decision to grant or deny declaratory relief is reviewed for an abuse of discretion."Barrow v. Detroit Election Comm. , 305 Mich.App. 649, 662, 854 N.W.2d 489(2014)(quotation marks and citation omitted).

Equity correctly cites the general rule that reply briefs are limited to rebuttal.SeeBlazer Foods, Inc. v. Restaurant Props., Inc. , 259 Mich.App. 241, 252, 673 N.W.2d 805(2003), citingMCR 7.212(G).This rule largely relates to presenting matters properly for appeal and the waiver of arguments raised for the first time in a reply.Seeid.;see alsoBronson Methodist Hosp. v. Mich. Assigned Claims Facility , 298 Mich.App. 192, 199, 826 N.W.2d 197(2012)(noting that reply briefs are limited to rebuttal and that raising an issue for the first time in a reply brief does not suffice to present the matter for appeal).The Michigan Court Rules similarly limit reply briefs on pretrial motions to "rebuttal of the arguments in the nonmoving party or parties’ response brief...."MCR 2.116(G)(1)(a)(iii).

But these restrictions do not apply to mootness, which both appellate and trial courts must address as it arises.SeePeople v. Richmond , 486 Mich. 29, 35, 782 N.W.2d 187(2010)("Whether a case is moot is a threshold issue that a court addresses before it reaches the substantive issues of the case itself.");see alsoMich. Chiropractic Council v. Comm'r of the Office of Fin. & Ins. Servs. , 475 Mich. 363, 371-372, 716 N.W.2d 561(2006)(opinion by YOUNG , J.)(stating that because mootness is jurisdictional in nature, it may be raised at any time and cannot be waived), overruled on other grounds byLansing Sch. Ed. Ass'n v. Lansing Bd. of Ed. , 487 Mich. 349, 352-353, 371 n 18, 792 N.W.2d 686(2010);see alsoAnglers of the AuSable, Inc. v. Dep't of Environmental Quality , 489 Mich. 884, 796 N.W.2d 240(2011)(order dismissing appeal on mootness grounds that arose during the pendency of the appeal).

Judicial power pertains to the right of courts of proper jurisdiction to determine actual cases and controversies arising between adversaries.SeeAnway v. Grand Rapids R. Co. , 211 Mich. 592, 616, 179 N.W. 350(1920), citingMuskrat v. United States , 219 U.S. 346, 361, 31 S.Ct. 250, 55 L.Ed. 246(1911).To ensure that the judiciary only exercises "judicial power" and does not usurp the power of other branches of government, Michigan courts and federal courts have developed justiciability doctrines, including mootness, to ensure that cases are appropriately before the court.SeeMich. Chiropractic Council , 475 Mich. at 370, 716 N.W.2d 561(opinion by YOUNG , J.).If an issue is moot, the court may not adjudicate the claim.Seeid . at 371-372, 716 N.W.2d 561.Further, the court must address mootness when it arises, whether that is in a reply brief or sua sponte.Seeid.

To the extent that Equity is arguing more generally that it was denied an opportunity to be heard on the issue, its argument is not supported by the record."Where a court considers an issue sua sponte, due process can be satisfied by affording a party an opportunity for rehearing."Al-Maliki v. LaGrant , 286 Mich.App. 483, 485-486, 781 N.W.2d 853(2009);see alsoBoulton v Fenton Twp , 272 Mich App 456, 463-464, 726 N.W.2d 733(2006)(indicating that due process was satisfied when the trial court considered a motion for reconsideration after sua sponte entering an order granting summary disposition).Here, Equity may have been surprised by the new argument...