Thomas v. Dutkavich.

• Decision Date: 28 October 2010
• Docket Number: Docket No. 293229.
• Citation: 290 Mich.App. 393,803 N.W.2d 352
• Parties: THOMASv.DUTKAVICH.
• Court: Court of Appeal of Michigan — District of US

290 Mich.App. 393

803 N.W.2d 352

THOMAS

v.DUTKAVICH.

Docket No. 293229.

Court of Appeals of Michigan.

Submitted Oct. 12, 2010, at Marquette.Decided Oct. 28, 2010, at 9:05 a.m.

Plunkett Cooney (by Mary Massaron Ross, Hilary A. Ballentine, Detroit, and James J. Murray, Petoskey) for Robert A. Thomas.Randolph B. Osstyn, Marquette, for Laverne and Marilyn Dutkavich.Buckles & Buckles, PLC, Birmingham (by Michael H.R. Buckles), and Roger L. Premo, for the Michigan Creditors Bar Association.

Before: MURPHY, C.J., and BECKERING and M.J. KELLY, JJ.MURPHY, C.J.

Defendants Laverne and Marilyn Dutkavich appeal as of right the trial court's order granting summary disposition in favor of plaintiff, Robert A. Thomas, with respect to his action to quiet title to real property, a condominium unit, and his claim of slander of title. The order granting summary disposition in favor of Thomas also effectively dismissed a counterclaim filed by the Dutkaviches. This appeal requires us to interpret the Michigan judgment lien act (MJLA), MCL 600.2801 et seq. , and to determine whether a judgment lien survives and can be foreclosed on after the judgment debtor's conveyance of the encumbered real property to a vendee who had record notice of the lien, but no available closing proceeds were distributed to the judgment creditor in whole or partial satisfaction of the underlying judgment. The Dutkaviches, who were the underlying judgment creditors, had sought to levy or foreclose on the property, which Thomas had purchased from the underlying judgment debtor, Steve Pelletier, without any proceeds going to pay off the judgment lien despite sufficient funds being available to discharge the lien. The trial court found that Thomas was not at fault for Pelletier's failure to use the closing proceeds to pay off the Dutkaviches, and the court ordered the discharge of the judgment lien. We hold that the MJLA, while not permitting the foreclosure of the judgment lien and not giving Thomas any statutory obligation to have made payment to the Dutkaviches, did require that the judgment lien remain attached to the property. We also hold, however, that outside the MJLA, the Dutkaviches may be able to levy on the property pursuant to MCL 600.6018, which is the traditional method of executing on realty to satisfy a judgment. A remand is necessary to explore the issue of levying pursuant to MCL 600.6018. Therefore, the trial court erred by discharging the judgment lien and erred by not considering MCL 600.6018. Consistently with our holding, the Dutkaviches' counterclaim seeking to hold Thomas personally liable was properly dismissed; Thomas's slander-of-title claim should have been dismissed; Thomas's quiet-title count should have been dismissed with regard to his request that the court discharge the judgment lien; and, with regard to levy and foreclosure under the quiet-title count, Thomas was entitled to the favorable ruling relative to the MJLA, but levying under MCL 600.6018 needs to be examined on remand. Accordingly, we affirm in part, reverse in part, and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

On December 6, 2004, in the Delta County Circuit Court, the Dutkaviches obtained a judgment against Steve Pelletier in the amount of $29,183.¹ A warranty deed, executed on December 29, 2006, and recorded on January 24, 2007, indicates that Pelletier purchased the real property at issue, a condominium unit located in Schoolcraft County, from Miller Point Development, L.L.C. Pelletier is the only vendee named in the warranty deed. A future-advances mortgage, executed on December 29, 2006, and recorded on February 7, 2007, reflects that Pelletier, along with his wife Kelly Jo Pelletier, obtained a mortgage on the property from the State Savings Bank of Manistique (mortgagee bank).

On July 20, 2007, the Dutkaviches filed a notice of judgment lien with the register of deeds office in Schoolcraft County with respect to the condominium unit. The notice provided that the balance owing on the judgment had increased to $33,368. On September 12, 2007, a real estate closing was held in which Steve and Kelly Jo Pelletier executed a warranty deed conveying the property to Thomas. The warranty deed was recorded the following day. The mortgage on the property held by the mortgagee bank, with the Pelletiers as mortgagors, was discharged the day before the closing. According to the warranty deed and the closing statement, the sale price for the property was $53,000. The settlement information contained in the closing statement indicates that, after taking into account the payment of taxes, title insurance, and closing fees, the Pelletiers were paid $51,784.² None of the proceeds from the sale were distributed to the Dutkaviches; there was no effort to satisfy the judgment lien despite the undisputed fact that the notice of judgment lien had been recorded before the closing. The trial court record does not include any documentary evidence concerning conversations at the closing or how the closing was conducted, let alone evidence revealing why the parties decided to proceed without designating a payment for the Dutkaviches. The closing documentation reflects that Fox Real Estate, Inc., was involved in the transaction.

On January 18, 2008, pursuant to a request by the Dutkaviches, the Delta Circuit Court entered an order to seize property relative to the judgment, which now had grown to $33,556, given accruing interest and postjudgment costs. A report of collection activity under the order to seize property reveals that a deputy sheriff was unable to locate any personal property held by Steve Pelletier that exceeded the statutory exemption. About a week later, in February 2008, a notice of levy on real estate was executed and recorded by a deputy sheriff with the Schoolcraft County Sheriff's Department.

On March 2, 2009, Thomas filed the instant quiet-title action in the Schoolcraft Circuit Court against the Dutkaviches and the Schoolcraft County Sheriff (SCS). Count I of the complaint, which pertained to all defendants, alleged that Thomas had purchased the property from the Pelletiers, that Steve Pelletier, but not his wife Kelly Jo, was subject to the Delta Circuit Court judgment obtained in favor of the Dutkaviches; that the Dutkaviches had recorded the notice of judgment lien before the sale of the property to Thomas; and that the Dutkaviches, through the efforts of a deputy sheriff employed by the SCS, had recorded the notice of levy on real estate following the sale. Plaintiff further alleged, as part of count I, that he owned the property free and clear of the Dutkaviches' interest and that, under MCL 600.2819, there could be no foreclosure on the lien and Thomas could not be held liable to the Dutkaviches. MCL 600.2819 provides:

There is no right to foreclose a judgment lien created under this chapter. At the time the judgment debtor makes a conveyance, as that term is defined in section 35 of 1846 RS 65, MCL 565.35, of, sells under an executory contract, or refinances the interest in real property that is subject to the judgment lien, the judgment debtor shall pay the amount due to the judgment creditor, as determined under [MCL 600.2807(3) ], to the judgment creditor.

According to Thomas, because the notice of levy was recorded after he purchased the property and after Steve Pelletier no longer held any interest in the property, the notice of levy was invalid under the MJLA. In count II of the complaint, Thomas alleged slander of title against the Dutkaviches, claiming that they had refused to discharge the judgment lien despite his requests for discharge and that their refusal constituted malice. In his prayer for relief, Thomas asked the trial court to declare the judgment lien and notice of levy void and order them discharged, to declare the warranty deed conveying the property to Thomas as superior to any interest held by the Dutkaviches, and to compensate Thomas for the damages and costs that he had incurred as a result of the slander of title.

The Dutkaviches filed a counterclaim, alleging that Thomas had failed to direct a payment to the Dutkaviches from the money being paid by Thomas to the Pelletiers at the closing, as was necessary to discharge the judgment lien. The Dutkaviches maintained that Thomas had paid the Pelletiers $51,784 at the closing and, therefore, there was more than enough money available from which Thomas could and should have paid the Dutkaviches. This claim sought a money judgment against Thomas.

Thomas moved for summary disposition, presenting an argument that paralleled the allegations in his complaint, as previously set forth. He also argued that it was improper for the Dutkaviches to have recorded the notice of judgment lien when the judgment was solely against Steve Pelletier and that property held as a tenancy by the entirety cannot be subject to a lien and levy on the basis of a judgment entered against only one of the spouses. The Dutkaviches responded by contending that the amount due under the judgment lien was not paid to them upon sale of the property as required by the MJLA. According to the Dutkaviches, discharge of the judgment lien would only be proper if the lien had been paid in full from the proceeds of the real estate transaction between Thomas and the Pelletiers. Therefore, Thomas was not entitled to summary disposition. The Dutkaviches also argued that the property had previously been deeded to Steve Pelletier in his name only, and not to Steve and Kelly Jo Pelletier, and thus Thomas's argument premised on the existence of a tenancy by the entirety was inapplicable. Finally, the Dutkaviches asserted that they could levy on the property pursuant to MCL 600. 6018, which is the traditional method to execute on realty. The SCS also moved for summary disposition, arguing in part that, when filing the notice of levy, he was acting in accordance with various statutory requirements and...