Petersen Fin. LLC v. City of Kentwood

• Decision Date: 20 November 2018
• Docket Number: No. 339399,339399
• Parties: PETERSEN FINANCIAL LLC, Plaintiff-Appellant, v. CITY OF KENTWOOD and Kent County Treasurer, Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

326 Mich.App. 433

928 N.W.2d 245

PETERSEN FINANCIAL LLC, Plaintiff-Appellant,

v.CITY OF KENTWOOD and Kent County Treasurer, Defendants-Appellees.

No. 339399

Court of Appeals of Michigan.

Submitted November 8, 2018, at Grand Rapids.

Decided November 20, 2018, 9:10 a.m.

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

Plunkett Cooney (by Josephine A. DeLorenzo, Bloomfield Hills, and David K. Otis, East Lansing) for the city of Kentwood.

Linda S. Howell and Sangeeta Ghosh for the Kent County Treasurer.

Before: Murphy, P.J., and O’Connell and Beckering, JJ.

Murphy, P.J.Plaintiff appeals as of right the circuit court’s order granting summary disposition in favor of defendants, the city of Kentwood (the city) and the Kent County Treasurer (the county treasurer), in this action involving claims related to the effect of tax foreclosure proceedings on special assessment agreements entered into by the city, which assessments were payable in installments and had encumbered real property purchased by plaintiff at a tax foreclosure sale. Plaintiff maintained that the judgment of foreclosure extinguished all special assessments connected to the property. The circuit court determined that it lacked subject-matter jurisdiction with respect to four of the five counts in plaintiff’s complaint, which sought declaratory relief regarding three of the underlying special assessment agreements, plus an amended version of one of those agreements. The court found that the Michigan Tax Tribunal (the MTT) had exclusive jurisdiction over those four counts. The circuit court also summarily dismissed the fifth count of plaintiff’s complaint that alleged slander of title predicated on special assessment liens and demands for payment that effectively clouded title. The court concluded that the city and the county treasurer were shielded by governmental immunity on the slander-of-title claim. We hold that the four counts dismissed for lack of subject-matter jurisdiction were within the jurisdiction of the circuit court, not the MTT, because they did not implicate the MTT’s fact-finding purpose and expertise but solely presented questions of law. And, for reasons elaborated on later in this opinion, we remand for entry of an order providing plaintiff with declaratory relief on two of the counts and for further proceedings on the remaining two counts.¹ We further hold that plaintiff’s argument that the circuit court erred by dismissing the slander-of-title count on the basis of governmental immunity is unavailing. Accordingly, we affirm in part and reverse and remand in part.

This case concerns real property located within the city. Starting in 2004, the city and the property owner, along with others, entered into various special assessment agreements relative to several infrastructure improvements that were to benefit the property for purposes of a planned unit development.² These agreements, which were recorded and involved the property owner making installment payments to the city, indicated that the contractual obligations contained therein constituted covenants that ran with the land and bound all successors in title. The city commission adopted multiple resolutions associated with the agreements and prepared and confirmed special assessment rolls for the improvements. Eventually, the property owner failed to pay the special assessments, a tax foreclosure action was commenced, a judgment of foreclosure was entered, the property owner failed to redeem the property or appeal the judgment, and title vested absolutely in the county treasurer as the foreclosing governmental unit. Subsequently, at a tax foreclosure sale, the county treasurer conveyed the property to plaintiff pursuant to a quitclaim deed.

More than one year later, plaintiff filed its complaint against defendants, alleging that under the General Property Tax Act (GPTA), MCL 211.1 et seq. , its "purchase was free and clear from all liens except any future installments of special assessments." Plaintiff asserted that despite the fact that title by fee simple absolute was conveyed to plaintiff in the tax foreclosure sale, the city continued to cloud the property’s title "by improperly attempting to revive past installments for special assessments as well as contractual obligations that were extinguished upon the final Judgment of Foreclosure...." Plaintiff complained that defendants "wrongfully attempted to recoup past due special assessment installments and continue[d] to charge Plaintiff for the same...." Plaintiff insisted that under the GPTA, all previously owed special assessment installments were extinguished by the judgment of foreclosure and that the county treasurer lacked the authority to deviate from the GPTA mandates.

As indicated earlier, the first four counts of plaintiff’s complaint each sought declaratory relief with respect to a particular special assessment agreement. Count I pertained to a deferred-assessment agreement, which, according to plaintiff, was scheduled to be paid off in full eight years before the tax foreclosure; therefore, any debt owed for unpaid installments was extinguished by the judgment of foreclosure. Count II concerned a voluntary special assessment/development agreement (VSADA), which plaintiff alleged was to be paid off within 10 years under the language of the special assessment roll, and which date had elapsed before the entry of the judgment of foreclosure. Therefore, any accrued debt for nonpayment was extinguished by the foreclosure judgment. Count III regarded a landscape/irrigation agreement, and plaintiff alleged that the termination date was eight years from the confirmation of the special assessment roll and that the last scheduled date for an installment payment had passed before the tax foreclosure proceedings. Thus, according to plaintiff, the debt owed on the unpaid balance was extinguished by the judgment of foreclosure. Count IV pertained to an amended VSADA,³ presenting a somewhat different issue than that posed in the first three counts. The amended VSADA was not executed by the former property owner but was an agreement between the city and the county treasurer that was signed after title had vested with the county treasurer but before plaintiff acquired its interest. In Count IV, plaintiff alleged that "[t]here was no authority for the Defendants to enter into the [amended] [ ] VSADA in an attempt to restore an assessment that had been voided by the GPTA." Plaintiff claimed that this agreement was not supported by any consideration and that it was against public policy. Finally, in regard to Count V, plaintiff alleged a cause of action for slander of title, seeking monetary damages. Plaintiff contended that defendants had maliciously and falsely continued to "assert that substantial special assessments exist on the Subject Property." Plaintiff maintained that defendants' "assertions have been published, as the installments claimed owing on the special assessments appear in title work, the public tax records, and in instruments recorded with the Kent County Register of Deeds." Plaintiff alleged that defendants’ misrepresentations had rendered the property "unmarketable for its true value."

On competing motions for summary disposition, the circuit court, with respect to Counts I through IV, agreed with defendants’ position that plaintiff was challenging the nature and imposition of the special assessments and, therefore, the MTT had exclusive jurisdiction over those counts. We note that the city, as confirmed in defendants’ appellate brief, "was not seeking to collect the Deferred Assessment or the Landscape Irrigation Agreement^{[4 ]} with respect to the Subject Property." The circuit court rejected all of plaintiff’s arguments regarding subject-matter jurisdiction. The circuit court also proceeded to rule:

Even if the court were persuaded that Plaintiff’s claims fall within the GPTA, Plaintiff’s position is fatally flawed.

A foreclosure under the GPTA specifically states that it extinguishes all liens against the property, including any lien for unpaid taxes or special assessments, except future installments of special assessments. MCL 211.78k(5)(c).^[5] The Defendants have stated, both on the record and in brief form, that they are only pursuing collection of the Voluntary Special Assessment/Development Agreement installments referenced in Plaintiff’s Count II. This assessment was amended after the foreclosure [see Count IV of plaintiff’s complaint]. Moreover, it addresses future installments that will be collected until 2024. Therefore, the foreclosure sale does not operate to extinguish the installments.

The court is also not persuaded by Plaintiff’s claims that the assessment is actually a contract. As more full[y] discussed in subsection "a" of this opinion, the issue of whether the assessment is actually a contract is for the MTT to determine. However, the court notes that Plaintiff is not a party to the assessment/contract and likely lacks standing to challenge it. Additionally, the forming document states "the parties agree that, to the extent not otherwise prohibited by law , the jurisdiction and venue for any such dispute shall be solely with the state courts located in Kent County, Michigan." As discussed above, the MTT has exclusive jurisdiction over this matter. A contract cannot establish or alter jurisdiction. [Citation omitted.]

In regard to Count V, slander of title, the circuit court ruled that the claim constitutes a tort that is covered by governmental immunity and that none of the statutory exceptions to immunity applied. Accordingly, the circuit court denied plaintiff’s motion for summary disposition and granted defendants’ summary disposition motion under MCR 2.116(C)(4) and (7).

We review de novo a circuit court’s ruling on a motion for summary disposition. Winkler v. Marist Fathers of Detroit, Inc. , 500 Mich. 327, 333, 901 N.W.2d 566 (2017). "We likewise review de...