Johnson v. White Pine Wireless

• Decision Date: 30 October 2008
• Docket Number: Docket No. 278695.,Docket No. 278258.
• Parties: JOHNSON FAMILY LIMITED PARTNERSHIP v. WHITE PINE WIRELESS, LLC.
• Court: Court of Appeal of Michigan — District of US

761 N.W.2d 353

281 Mich. App. 364

JOHNSON FAMILY LIMITED PARTNERSHIP v. WHITE PINE WIRELESS, LLC.

Docket No. 278258.

Docket No. 278695.

Court of Appeals of Michigan.

Submitted October 14, 2008, at Grand Rapids.

Decided October 30, 2008, at 9:00 a.m.

October 30, 2008.

Mark A. Hullman, Traverse City, for the plaintiff.

Bishop & Heintz, P.C. (by Steven R. Fox and Douglas S. Bishop), for White Pine Wireless, LLC.

Tom H. Evashevski, St. Ignace, for J.P.M.S., Inc.

Before: O'CONNELL, P.J., and BANDSTRA and GLEICHER, JJ.

BANDSTRA, J.

In this suit to reform a deed and enforce restrictions, defendants J.P.M.S., Inc. (JPMS), and White Pine Wireless, LLC (White Pine), appeal as of right the trial court's grant of summary disposition in favor of plaintiff, Johnson Family Limited Partnership (the Partnership). On appeal, the primary issues are whether the trial court could properly reform an unambiguous deed to include omitted deed restrictions notwithstanding the doctrine of merger, whether the facts supported reformation of the deed at issue on the basis of mutual or unilateral mistake, and, if the trial court properly reformed the deed, whether White Pine's construction of a cell tower violated the restrictions. We conclude that the trial court properly reformed the deed to include the omitted restrictions, but that there was insufficient record evidence to support the conclusion that the cell tower constitutes wires or conduits within the meaning of the restrictions. For that reason, we affirm in part, reverse in part, and remand for further proceedings.

I. BASIC FACTS AND PROCEDURAL HISTORY

In approximately 2000, JPMS began negotiations to purchase a parcel of real property owned by the Partnership. At the time, the Johnson Family Trust (the Trust) served as the general partner for the Partnership. In September 2000, the Trust entered into a purchase agreement to sell the property to JPMS. The Trust did not indicate whether it was signing on behalf of the Partnership.

The agreement provided that "[t]he Deed to be executed in conveyance of the Subject property shall contain" certain specified building and use restrictions that would be applicable "until Seller shall cease to own the property commonly known as Acme Village." Among the restrictions were the following:

(j) No exterior lighting shall be installed on the property, which shall shine upon the street or any adjoining property without the approval of the Seller or his successor. No power, telephone or other utility wires or conduits shall be installed above ground on the property other than the currently existing power lines.

(k) No statue, fence or other unnatural improvements shall be permitted on the Property without the approval of his [sic] Seller or successor.

Corporate Title Agency handled the closing, which occurred on December 13, 2000, with neither party in attendance. Jerome Jelinek, who is the president of Corporate Title Agency and an attorney, prepared the warranty deed for the closing. However, Jelinek did not include the restrictions on the deed. The warranty deed was recorded on December 29, 2000. After the closing, a hotel was built on the property. JPMS later leased the hotel to American Hospitality Management, which operates a Holiday Inn Express at the site.

On February 28, 2006, JPMS granted an option to lease a portion of the property at issue to White Pine. The option had a term of one year and could be exercised by paying $550 to JPMS. In March 2006, White Pine applied for a special use permit to construct a cell tower on the property. As a result of this application, the Partnership became aware of White Pine's plan to build a cell tower on the property the Partnership sold to JPMS. Shortly thereafter, the Partnership also learned its deed to JPMS did not contain the restrictions described in the purchase agreement. After the Partnership contacted the title company about the discrepancy in the deed, Jelinek prepared an affidavit listing the restrictions and indicating that the restrictions had been omitted from the deed. He also indicated that the affidavit was intended to correct the warranty deed to reflect the parties' intent. The affidavit was recorded on June 28, 2006.

In July 2006, the Partnership contacted the township regarding its belief that the land in question was subject to restrictions. After the township forwarded the Partnership's letter to White Pine, White Pine acknowledged the claims in a letter to the township dated July 21, 2006. On August 1, 2006, the township approved the special use permit.

On September 6, 2006, the Partnership sued White Pine for declaratory and injunctive relief. On December 7, 2006, the Partnership amended its complaint to join JPMS. In the amended complaint, the Partnership asked the trial court to reform the deed so that a mutual mistake regarding the non-inclusion of the restrictions listed in the purchase agreement could be corrected, to declare that the restrictions properly apply to White Pine because White Pine had notice of the claimed restrictions before it exercised its option to lease, and to enjoin the construction of the cell tower.

On October 23, 2006, White Pine assigned its option to lease to SBA Towers, Inc. And, by December 13, 2006, SBA completed the construction of the cell tower and a fence around it.

On February 12, 2007, White Pine moved for summary disposition. White Pine argued that the restrictions did not apply to the property because they were not part of the recorded deed, which must be enforced as written, and that consideration of any previous negotiations or agreements was barred under the doctrine of merger. It further argued that JPMS never intended to create deed restrictions on the property. It also contended that it was a bona fide purchaser for value and, therefore, not bound by unrecorded deed restrictions. White Pine also argued that, even if the deed restrictions were to apply, the cell tower did not violate any of the deed restrictions. Finally, White Pine argued that it would be inequitable for the trial court to enforce the deed restrictions against it under the circumstances.

On March 8, 2007, the Partnership also moved for summary disposition. It argued that there was no dispute that the parties had intended the restrictions to apply to the property and that the deed did not reflect that intent. Thus, the Partnership contended, it was entitled to a reformation of the deed to include the restrictions. The Partnership also argued that White Pine did not obtain an interest in the property until after White Pine exercised the lease option. Because White Pine had notice of the claimed restrictions by the time it exercised the lease option, the Partnership further argued that White Pine could not avoid application of the restrictions as a bona fide purchaser for value. On the basis of these arguments, the Partnership asked the trial court to grant the requested relief.

On March 16, 2007, JPMS responded to the Partnership's motion for summary disposition. JPMS argued that the omission of the restrictions was not the result of mutual mistake. JPMS supported this contention with an affidavit by the president of JPMS, Donald R. Schappacher. In the affidavit, Schappacher stated that his attorneys had expressed concerns over the restrictions contained in the purchase agreement, which, they indicated, should be resolved before closing. Schappacher further averred that JPMS's attorneys were delegated the task of reviewing the deed and, when the deed arrived with no restrictions, the attorneys approved the deed with the understanding that the deed was not subject to the restrictions. JPMS also argued that the doctrine of laches applied to the facts of the case and should preclude equitable relief. For these reasons, JPMS asked the trial court to deny the Partnership's motion and grant summary disposition in JPMS's favor under MCR 2.116(I)(2).

On May 7, 2007, the trial court issued its opinion and order. The trial court concluded that the Partnership was entitled to reformation of the deed to include the restrictions under the undisputed facts of the case. The trial court also rejected the contentions that the merger doctrine barred reformation and that White Pine was a bona fide purchaser. Finally, the trial court concluded that the cell tower constituted a utility conduit and, therefore, violated the use restrictions. For these reasons, the trial court granted the Partnership's motion for summary disposition and denied White Pine's motion for summary disposition. On May 31, 2007, the trial court entered a judgment reforming the deed to include the restrictions, enjoining the construction of a cell tower and fence, and ordering the removal of the existing cell tower and fence.

White Pine and JPMS appealed separately. The appeals were consolidated.

II. THE EQUITABLE POWER TO REFORM A DEED

White Pine first argues that the deed at issue was not ambiguous and did not contain any restrictions. Therefore, the trial court did not have the authority to reform it to include restrictions and should have enforced the deed as written.

A. STANDARD OF REVIEW

This Court reviews de novo decisions on motions for summary disposition. State Farm Fire & Cas. Co. v. Corby Energy Services, Inc., 271 Mich.App. 480, 482, 722 N.W.2d 906 (2006). Whether a grant of equitable relief is proper under a given set of facts is a question of law that this Court also reviews de novo. McDonald v. Farm Bureau Ins. Co., 480 Mich. 191, 197, 747 N.W.2d 811 (2008).

B. THE POWER TO REFORM AN UNAMBIGUOUS DEED

Michigan courts sitting in equity have long had the power to reform an instrument that does not express the true intent of the parties as a result of fraud, mistake, accident, or surprise. See Scott v. Grow, 301 Mich. 226, 238-239, 3 N.W.2d 254 (1942); see also Potter v. Chamberlin, 344 Mich. 399, 407, 73 N.W.2d 844 (1955) (noting that the "power of a court of equity...