Ligon v. City of Detroit

Decision Date26 June 2007
Docket NumberDocket No. 264266.
PartiesWilliam LIGON, Plaintiff-Appellee/Cross-Appellant, v. CITY OF DETROIT, Defendant-Appellant/Cross-Appellee.
CourtCourt of Appeal of Michigan — District of US

Before: WHITBECK, C.J., and SAWYER and JANSEN, JJ.

PER CURIAM.

In this inverse condemnation action,1 defendant city of Detroit (the city) appeals as of right a partial judgment for plaintiff William Ligon. Ligon cross-appeals the same judgment. We affirm in part, vacate in part, and remand for entry of an amended judgment in favor of Ligon consistent with this opinion.

I

In 1980, Ligon and his partner, Fonzie Robinson, jointly executed a land contract to purchase from Paul Kales a certain parcel of real property located in the city. Ligon and Robinson each held a one-half interest in the property as cotenants and jointly operated a business in a building situated on the land. Although a deed was not recorded, Ligon claimed that he paid off the land contract in 1988.

In about 1990, Robinson filed for bankruptcy, and the bankruptcy estate acquired Robinson's one-half interest in the property. In 1991, Ligon entered into a land contract to purchase Robinson's former one-half interest from the bankruptcy estate. At the end of the land contract term in 1995, the bankruptcy trustee delivered a deed conveying Robinson's former one-half interest to Ligon. The bankruptcy trustee's deed was delivered in November 1995 and recorded in February 1996.

In January 1996, the city commenced tax foreclosure proceedings against the property, naming Ligon, Robinson, and other defendants. Detroit v. Kales, Wayne Circuit Court Docket No. 96-601825-CH. Ligon argued that he had not personally received notice of the tax foreclosure proceedings. In July 1996, a default judgment was entered in the tax foreclosure proceedings. Then, in August 1996, an "Order Vacating Judgment as to William Ligon Only" was entered in the tax foreclosure proceedings. The city later agreed to voluntarily dismiss Ligon altogether as a party to the tax foreclosure proceedings. In October 1997, as a result of the tax foreclosure proceedings, the state of Michigan executed a deed reconveying the property to the city. In 2000, the city took possession of the property and building. The city demolished the building "in error" in 2002. Ligon then commenced this action.

II

A trial court's decision on a motion for summary disposition is reviewed de novo. Hess v. Cannon Twp., 265 Mich. App. 582, 589, 696 N.W.2d 742 (2005). Constitutional claims are also reviewed de novo. Id. Specifically, appellate courts review de novo whether a taking of private property is constitutional. City of Novi v. Robert Adell Children's Funded Trust, 473 Mich. 242, 248, 701 N.W.2d 144 (2005). Following a bench trial, we review for clear error the trial court's factual findings and review de novo its conclusions of law. Glen Lake-Crystal River Watershed Riparians v. Glen Lake Ass'n., 264 Mich. App. 523, 531, 695 N.W.2d 508 (2004). Finally, we review for an abuse of discretion a trial court's ruling on a motion to amend a judgment. See McDonald's Corp. v. Canton Twp., 177 Mich.App. 153, 158, 441 N.W.2d 37 (1989).

III

Both the state and federal constitutions prohibit the taking of private property for public use without just compensation.2 U.S. Const., Am. V; Const. 1963, art. 10, § 2; Adams Outdoor Advertising v. East Lansing (After Remand), 463 Mich. 17, 23, 614 N.W.2d 634 (2000). The "property" protected by the constitutions includes not only title, but all character of vested rights, including possession, dominion, control, and the right to make any legitimate use of the premises. Rassner v. Fed. Collateral Society, Inc., 299 Mich. 206, 213-214, 300 N.W. 45 (1941).

IV

On the parties' motions for summary disposition, the trial court ruled that at the time the city demolished the building, Ligon had a valid one-half ownership interest in the property. The city argues that this ruling was erroneous. We disagree with the city.

Ligon acquired a valid one-half interest in the property as a purchaser under the land contract with Kales, which was recorded. A land contract may be recorded, and the recording of a land contract "shall have the same force and effect" as the recording of a deed. MCL 565.354. As the city correctly concedes, a land-contract vendee is vested with equitable title, and his or her interest is an interest in the real estate. Darr v. First Fed. S. & L. Ass'n of Detroit, 426 Mich. 11, 19-20, 393 N.W.2d 152 (1986); Gilford v. Watkins, 342 Mich. 632, 637, 70 N.W.2d 695 (1955). A land-contract vendee accordingly is the equitable owner of the property. Pittsfield Charter Twp. v. City of Saline, 103 Mich.App. 99, 104, 302 N.W.2d 608 (1981). Although no deed from Kales was ever recorded, Ligon never gave up his purchaser's interest under the land contract and never relinquished his equitable title. Ligon acquired a protected one-half interest in the property by way of the land contract with Kales.

When the city began tax foreclosure proceedings in January 1996, it appears that Ligon did not receive notice. As a general rule, when notice to an affected party has been constitutionally deficient, a resulting tax foreclosure judgment against that party violates his or her right to due process. See, generally, In re Petition by Wayne Co. Treasurer, 478 Mich. 1, 732 N.W.2d 458 (2007). In such a case, the proper remedy is to vacate the judgment of foreclosure and restore the party's ownership interest in the property at issue. Id. Of particular note here, a party's knowledge of a tax delinquency does not equate to notice of a foreclosure proceeding. Detroit v. John J. Blake Realty Co., 144 Mich.App. 432, 437, 376 N.W.2d 114 (1984).

Even if Ligon had received constitutionally adequate notice, after the tax foreclosure proceedings were commenced and a default judgment was entered, the city voluntarily dismissed Ligon as a party to the proceedings and the trial court entered an "Order Vacating Judgment as to William Ligon Only." Because Ligon was dismissed as a party, the foreclosure proceedings necessarily could not have extinguished or impaired his vested property interest. The general rule is that an individual's property rights cannot be affected or impaired by a tax foreclosure judgment unless he or she is a party to the proceedings. 72 Am. Jur. 2d, State & Local Taxation, § 805, pp. 221-222; 85 C.J.S., Taxation, § 1278, p 389. Similarly, because the judgment of foreclosure was vacated "as to William Ligon," it could no longer bind Ligon. A judgment of foreclosure "binds those only who are parties to it. . . ." West Michigan Park Ass'n v. Pere Marquette R. Co., 172 Mich. 179, 187, 137 N.W. 799 (1912).

Ligon had a protected one-half interest in the property at issue. This property interest was not extinguished by the tax foreclosure proceedings, for which Ligon received deficient notice and from which Ligon was dismissed as a party. The trial court did not err in holding that Ligon had a valid one-half interest in the property at the time the city demolished the building.

However, our conclusion in this regard does not answer the question whether the tax foreclosure proceedings affected or impaired the other one-half interest in the property, acquired by Ligon from the bankruptcy trustee in November 1995. Specifically, Ligon argues on cross-appeal that the trial court erred in ruling that the bankruptcy trustee's conveyance to him of Robinson's former one-half interest was invalid. We agree with Ligon.

Following the bench trial held in this matter, the trial court found that the bankruptcy trustee had "quitclaimed all the interest" once held by Robinson to Ligon. However, the trial court went on to opine that the bankruptcy trustee's quitclaim deed actually conveyed nothing to Ligon because it "was, of course, subject to the lis pendens." Indeed, a lis pendens had been filed by the city at the time the tax foreclosure proceedings were commenced in January 1996. Because this lis pendens was filed in January 1996, but the trustee's deed to Ligon was not recorded until February 1996, the trial court concluded that Robinson's former one-half interest, purportedly conveyed by the bankruptcy trustee's deed, was a "subsequently acquired interest" and was therefore "subject to the foreclosure spoken [of] in the lis pendens." Accordingly, the trial court found that the lis pendens prevented the trustee's deed from transferring Robinson's former one-half interest to Ligon in this case.

The court's findings concerning the lis pendens and Robinson's former one-half interest were clearly erroneous, and the court's legal conclusion based on these erroneous findings was incorrect. Glen Lake-Crystal River Watershed, supra at 531, 695 N.W.2d 508. As the city admits in its briefs on appeal, the bankruptcy trustee's deed to Ligon was delivered in November 1995, but the lis pendens and tax foreclosure proceedings were not filed until January 1996. "A deed takes effect from the time of its delivery, and not from the time of its date, execution or record[ing]." Power v. Palmer, 214 Mich. 551, 559, 183 N.W. 199 (1921); see also Stevens v. Burgess, 263 Mich. 98, 102-103, 248 N.W. 560 (1933). As between the parties, an otherwise-conforming deed is valid even if it is not recorded. Smith v. Fiting, 37 Mich. 148, 150-151 (1877).

A lis pendens is "notice . . . of what [is] involved in the suit." Maximovich v. Wojtowicz, 236 Mich. 643, 645, 211 N.W. 65 (1926). A lis pendens does not annul property interests, "but merely render[s] them `subordinate to the rights of the parties to the...

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