3100 Woodward 2014 LLC v. Woodward and Erskine LLC ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
3100 WOODWARD 2014, LLC, UNPUBLISHED
April 5, 2018
Plaintiff-Appellant,
v No. 335205
Wayne Circuit Court
WOODWARD AND ERSKINE, LLC, and LC No. 15-010490-CB
SACHSE CONSTRUCTION & DEVELOPMENT
COMPANY, LLC,
Defendants-Appellees.
Before: M. J. KELLY, P.J., and JANSEN and METER, JJ.
PER CURIAM.
Plaintiff appeals as of right the trial court’s order denying its motion for summary
disposition and granting summary disposition in favor of defendant Woodward and Erskine,
LLC,1 pursuant to MCR 2.116(C)(7) (claim barred by statute of frauds), and (C)(8) (failure to
state a claim for relief). We affirm.
I. FACTS AND PROCEEDINGS
This dispute concerns the validity of easements arising from the development of a city
block in the Brush Park Historic District in Detroit (“the block”). The block is bounded by
Woodward Avenue on the west, Watson Street on the south, John R Street on the east, and
Erskine Street on the north. In 2000 and 2002, the Fraternal Civic Center (“FCC”), an entity
related to the Masons, a fraternal organization, acquired title to all property on the block. In
2004, FCC and Belmar Development Group, LLC (“Belmar”), entered into a joint venture
agreement (“JV Agreement”) for the purpose of developing the block. Belmar subsequently
assigned its rights and obligations under the JV Agreement to the entity 3100 Woodward, LLC
1
Defendant Sachse Construction & Development was not named as a party-defendant in
plaintiff’s first amended complaint and did not thereafter participate in this proceeding.
Therefore, the singular term “defendant” is used in this opinion.
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(hereafter “Old 3100 Woodward”).2 In 2006, pursuant to the JV Agreement plan, FCC conveyed
Lots 5, 6, and 1 (also referred to as Parcel 1 and Parcel 2) to Old 3100 Woodward. Thereafter,
Old 3100 Woodward prepared a site plan for developing this area into a condominium project,
Crystal Loft. The Wayne County plat engineer and Old 3100 Woodward’s lender, LaSalle Bank,
required Old 3100 Woodward to obtain easements to accommodate trash collection and parking.
In 2006 and 2007, Old 3100 Woodward recorded declarations of easement, referred to as a trash
easement and a parking easement, situated on Lots 7, 8, and 9, which were adjacent to and north
of Lot 6. Although FCC remained the owner of Lots 7, 8, and 9, Old 3100 Woodward executed
the easements as grantor, without identifying FCC as the owner or itself as an agent of FCC. The
declarations of easement were recorded with the Wayne County Register of Deeds.
Old 3100 Woodward subsequently transferred its ownership interest in Lots 5, 6, and 1 to
Crystal Lofts REO, LLC. In 2014, FCC conveyed a quitclaim deed to Crystal Lofts REO for
whatever interest it might still hold in Lots 5, 6, and 1. The quitclaim deed referenced the
recorded trash easement and parking easement in the description of the property transferred.
Subsequently, Crystal Lofts REO conveyed its interest in Lots 5, 6, and 1 to plaintiff. FCC
conveyed its ownership interest in Lots 7, 8, and 9 to defendant. Before closing the latter
transaction, defendant discovered the recorded trash and parking easements, but disavowed their
validity.
Plaintiff filed this action seeking declaratory and injunctive relief to confirm its easement
rights in Lots 7, 8, and 9. The parties filed cross-motions for summary disposition regarding the
validity of the trash and parking easements. Defendant argued that the easements were invalid
because Old 3100 Woodward had no authority to convey an easement interest on property owned
by FCC. Plaintiff maintained that Old 3100 Woodward had the authority as FCC’s agent in the
joint venture to grant easements necessary to carry out the JV Agreement’s development plans.
Alternatively, plaintiff argued that FCC’s 2014 quitclaim deed to Old 3100 Woodward ratified
the easements or created them anew. Plaintiff also argued that it was a bona fide purchaser for
value of Lots 5, 6, and 1 with the recorded easement rights. The trial court denied plaintiff’s
motion and granted summary disposition in favor of defendant pursuant to MCR 2.116(C)(7) and
(8).
II. SUMMARY-DISPOSITION STANDARDS
Initially, plaintiff argues that the trial court erroneously considered evidence beyond the
pleadings in granting summary disposition to defendant under MCR 2.116(C)(8). We disagree.
We review de novo a trial court’s decision to grant summary disposition. Haynes v
Village of Beaulah, 308 Mich. App. 465, 467; 865 NW2d 923 (2014). “A motion under MCR
2.116(C)(8) tests the legal sufficiency of the complaint. All well-pleaded factual allegations are
accepted as true and construed in a light most favorable to the nonmovant.” Maiden v Rozwood,
461 Mich. 109, 119; 597 NW2d 817 (1999). “A motion under MCR 2.116(C)(8) may be granted
2
Plaintiff asserts that Old 3100 Woodward is an entirely distinct entity from plaintiff, 3100
Woodward 2014, LLC.
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only where the claims alleged are so clearly unenforceable as a matter of law that no factual
development could possibly justify recovery.” Id. (quotation marks and citation omitted).
Plaintiff correctly observes that a court may consider “only the pleadings” when deciding
a motion brought under MCR 2.116(C)(8). Maiden, 461 Mich. at 119-120. However, if a claim
is based on a written instrument that is attached to a pleading as an exhibit, the exhibit “is a part
of the pleading for all purposes.” MCR 2.113(F)(2). Thus, “[i]n a contract-based action, . . . the
contract attached to the pleading is considered part of the pleading.” Liggett Restaurant Group,
Inc v City of Pontiac, 260 Mich. App. 127, 133; 676 NW2d 633 (2003). A deed is a contract.
Negaunee Iron Co v Iron Cliffs Co, 134 Mich. 264, 279; 96 N.W. 468 (1903); Penrose v
McCullough, 308 Mich. App. 145, 147; 862 NW2d 674 (2014).
Plaintiff’s claims were based on the declarations of the trash easement and the parking
easement, the JV Agreement, the two amendments to the JV Agreement, the 2014 quitclaim
deeds, and Crystal Lofts REO’s October 28, 2014, covenant deed to plaintiff. All of these
documents were attached to plaintiff’s first amended complaint in support of plaintiff’s claims to
establish the validity of the easements. Accordingly, they were properly considered part of the
pleadings for all purposes, and could be considered as part of the analysis under MCR
2.116(C)(8). Plaintiff does not identify any other evidence beyond the pleadings that the trial
court considered. The court specifically stated that it would not consider John Gardner’s
affidavit.
We note that in their respective summary-disposition briefs, both parties cited evidence
beyond the pleadings and beyond the contracts that formed the basis of plaintiff’s claims.
However, plaintiff had moved for summary disposition under MCR 2.116(C)(10) and defendant
had also moved for summary disposition under MCR 2.116(C)(7), and MCR 2.116(G)(6) allows
a court to consider any affidavits, depositions, and other documentary evidence submitted in
support of or in opposition to a motion under each of those subrules. Ultimately, the trial court
granted summary disposition under MCR 2.116(C)(8) based on the language of the JV
Agreement and the August 2014 deeds. The court determined that the JV Agreement did not
grant Belmar or its assignee authority to convey property owned by FCC. The court determined
that the August 2014 deeds’ descriptions of the property did not create an easement, but merely
referenced “easements that were alleged to have already been granted, the 2006 and 2007 trash
and parking easements, the court already found to be invalid.” Because these documents were
part of the pleadings, the trial court did not improperly consider evidence outside the pleadings in
deciding the motion under MCR 2.116(C)(8).
Plaintiff also complains that the trial court improperly granted summary disposition under
MCR 2.116(C)(7) without stating its reasons. Subrule (C)(7) permits summary disposition if a
claim is barred by the statute of frauds. In reviewing a motion under subrule (C)(7), a court
accepts as true the plaintiff’s well-pleaded allegations of fact, construing them in the plaintiff’s
favor, unless other evidence contradicts them. Dextrom v Wexford County, 287 Mich. App. 406,
428; 789 NW2d 211 (2010). The Court considers affidavits, pleadings, depositions, admissions,
and any other documentary evidence to determine whether a genuine issue of material fact exists.
Id. at 429.
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The statute of frauds, MCL 566.106, provides:
No estate or interest in lands, other than leases for a term not exceeding 1
year, nor any trust or power over or concerning lands, or in any manner relating
thereto, shall hereafter be created, granted, assigned, surrendered or declared,
unless by act or operation of law, or by a deed or conveyance in writing,
subscribed by the party creating, granting, assigning, surrendering or declaring the
same, or by some person thereunto by him lawfully authorized by writing.
“An easement is an interest in land that is subject to the statute of frauds.” Forge v Smith, 458
Mich. 198, 205; 580 NW2d 876 (1998). “Contracts conveying an interest in land made by an
agent having no written authority are invalid under the statute of frauds unless ratified by the
principal.” Id. at 208-209 (citations omitted). Defendant argued below that the declarations of
easement were not valid because they were not signed by an owner of the burdened property.
Although the trial court did not explicitly say so, it is clear from its remarks that it agreed with
defendant’s argument that there was no valid writing conveying the easements. Regardless, we
need not be concerned with whether the trial court adequately explained the basis for its decision
to grant summary disposition under MCR 2.116(C)(7) because our review is de novo. As further
discussed below, on de novo review, we agree that defendant was entitled to summary
disposition under MCR 2.116(C)(7) on the basis of the statute of frauds.
III. OLD 3100 WOODWARD’S AUTHORITY TO GRANT EASEMENT
Plaintiff argues that the trial court erred in concluding that the JV Agreement and
amendments did not give Old 3100 Woodward authority to grant the easements over FCC’s
property. “Issues regarding the proper interpretation of a contract or the legal effect of a
contractual clause are reviewed de novo.” McCoig Materials, LLC v Galui Constr, Inc, 295
Mich. App. 684, 694; 818 NW2d 410 (2012).
“An easement is the right to use the land of another for a specified purpose.” Penrose,
308 Mich. App. at 148 (quotation marks and citation omitted). An easement “may be created by
express grant, by reservation or exception, or by covenant or agreement.” Id. (quotation marks
and citation omitted). “A right of way cannot very well be granted by deed, estoppel, or
otherwise, by anyone but the landowner.” von Meding v Strahl, 319 Mich. 598, 606; 30 NW2d
363 (1948), overruled in part on other grounds by Harrison v Heald, 360 Mich. 203; 103 NW2d
348 (1960), as explained in Schmidt v Eger, 94 Mich. App. 728, 733-735; 289 NW2d 851 (1980).
“It is the general rule that restrictions will be construed strictly against those claiming to enforce
them, and all doubts resolved in favor of the free use of the property.” Moore v Kimball, 291
Mich. 455, 461; 289 N.W. 213 (1939).
Plaintiff argues that Old 3100 Woodward had authority under the JV Agreement to
convey an easement on behalf of FCC, the owner of the burdened property. In support of this
argument, plaintiff offers a lengthy discussion of the features of joint ventures and why FCC’s
relationship with Belmar, succeeded by Old 3100 Woodward, should be classified as a joint
venture. However, plaintiff does not argue that the existence of a joint-venture relationship
between FCC and Old 3100 Woodward was sufficient by itself to bestow on the latter the
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authority to grant an easement over property owned by the former. The pertinent question is
whether the JV Agreement and amendments provided such authority.
“When interpreting a contract, the examining court must ascertain the intent of the parties
by evaluating the language of the contract in accordance with its plain and ordinary meaning.”
McCoig Materials, 295 Mich. App. at 694. “Every word, phrase, and clause in a contract must be
given effect, and any interpretation that would render any part of the contract surplusage or
nugatory must be avoided.” Id.
Plaintiff relies on Summers v Hoffman, 341 Mich. 686; 69 NW2d 198 (1955), in support
of its argument that the JV Agreement should be interpreted as a joint venture with respect to
determining Old 3100 Woodward’s authority as FCC’s agent. In Summers, id. at 689-690, the
plaintiff purchased property from the vendor by land contract. The plaintiff alleged that he
entered into an oral contract with the defendants whereby the defendants agreed to provide
financing to purchase property, clear the title, and develop the land, and the plaintiff agreed to
manage the litigation to clear title and manage the development of the property. Id. at 690. In
addition, the plaintiff “would be entitled to 1/2 of the profits made from the sale thereof after
defendants were paid in full for all moneys expended by them in connection with the property.”
Id. After this transaction was completed, the plaintiff and defendants purchased by land contract
an adjoining parcel of land from the same vendor. Id. at 691. The plaintiff claimed that the
“same agreement regarding division of profits, et cetera, also applie[d]” to the second purchase.
Id. The defendants subsequently denied the existence of any agreement. Id. The Michigan
Supreme Court concluded that the parties’ agreement “amounted to a joint adventure.” Id. at
692. The Court quoted its decision in Hathaway v Porter Royalty Pool, Inc, 296 Mich. 90; 295
N.W. 571 (1941), amended 296 Mich. 733 (1941), wherein it stated:
“It can be said that a joint adventure contemplates an enterprise jointly
undertaken; that it is an association of such joint undertakers to carry out a single
project for profit; that the profits are to be shared, as well as the losses, though the
liability of a joint adventurer for a proportionate part of the losses or expenditures
of the joint enterprise may be affected by the terms of the contract. See 17 Ann
Cas 1022, 1025; 24 Ann Cas 202, 203, and 39 Ann Cas 1210, 1214. There must
be a contribution by the parties to a common undertaking to constitute a joint
adventure (see annotation, 63 A.L.R. 909, 910); and a community of interest as well
as some control over the subject matter or property right of contract.” [Summers,
341 Mich. at 692, quoting Hathaway, 296 Mich. at 102-103.]
The Summers Court further stated:
Also, see Price v Nellist, 316 Mich. 418[; 25 NW2d 512 (1947)]; Fletcher
v Fletcher, 206 Mich. 153[; 172 N.W. 436 (1919)]. A consideration of the salient
facts in the instant case shows that the contract embodied characteristics of a joint
venture. A single project was involved, namely, the development and sale of two
large parcels of real estate. The profits, after expenses, were to be divided 50% to
plaintiff and 50% to defendants. Both made a contribution: plaintiff contributed
his time, skill and supervision, while defendants contributed the capital. Both had
control over the property as defendants were the record owners of one parcel and
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joint owners with plaintiff of the other, while plaintiff was conducting the
physical improvement of the land and endeavoring to sell the lots. But defendants
claim that under the agreement plaintiff would not share any losses or bear the
risk of loss in case of an adverse decision in the suit involving the title to the
property. With this contention we cannot agree. “Loss” does not necessarily
mean actual “monetary loss.” If the land was eventually sold at a loss the result
would be that plaintiff’s expenditure of time would have been for naught as would
defendants’ monetary investment. If the title litigation had been decided
adversely then plaintiff would have lost large out-of-pocket expenses and the
value of the time which he had theretofore spent on the project which, while not
quite as concrete or measurable as defendants’ cash investment, is nevertheless a
loss. It cannot be said that the plaintiff did not share any risk of loss, for as we
said in Hathaway v Porter Royalty Pool, Inc, supra (p 103): “Though the liability
of a joint adventurer for a proportionate part of the losses or expenditures of the
joint enterprise may be affected by the terms of the contract.” [Summers, 341
Mich. at 693.]
The Court framed the parties’ issue as whether the statute of frauds applied “to an agreement
between joint adventurers for a division of profits on the sale of land[.]” Id. at 694. The Court
concluded that statutes of fraud “do not apply to the activity of one joint adventurer in selling the
property which is the subject of the venture and in which he has a distinct interest.” Id. at 696.
The Court stated:
The joint adventure relationship is a fiduciary one in which the members owe
each other a high degree of good faith. Each member is both an agent for his
coadventurer and a principal for himself. 48 CJS Joint Adventures, § 5, page 827.
The property acquired in behalf of the adventure, even though title might be in
only one person, is held in trust for all members, each of whom may acquire an
equitable interest in the land or the proceeds on performance of his obligations.
See Lane v Wood, 259 Mich. 266[; 242 N.W. 909 (1932)]; Rossman v Marsh, 287
Mich. 720[; 286 N.W. 83 (1939)]; 48 CJS, Joint Adventures, § 7, p 833. [Summers,
341 Mich. at 696.]
The Court noted that there was no apparent reason “why the legislature would intend to have the
statute cover this situation where the legal duties and obligations of the parties are clearly
defined, are adequately enforced and protected in the courts, and where the parties are in effect
acting on their own behalf in selling property in which they have much more than the usual
agent’s interest.” Id. at 696-697.
We are not persuaded that the statement in Summers, id. at 696, that “[e]ach member [of
a joint venture] is both an agent for his coadventurer and a principal for himself” can be isolated
from its context and construed as a broad pronouncement that members of a joint venture have
full authority to act as each other’s agents in all acts related to the purpose of the joint venture.
Plaintiff does not cite any more recent or more specific authority endorsing such a
pronouncement. Read in context, the statement pertains to the Court’s conclusion that the statute
of frauds did not apply to the type of business association formed by the plaintiff and the
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defendant in that case because the nature of their relationship obviated the need for the protection
provided by the statute of frauds.
Plaintiff also places emphasis on the statement in Summers, id., that “[t]he property
acquired in behalf of the adventure, even though title might be in only one person, is held in trust
for all members, each of whom may acquire an equitable interest in the land . . . .” Plaintiff
argues that the JV Agreement pertained to the entire block and that, therefore, Old 3100
Woodward was an agent for FCC and for all the property involved in the venture,
notwithstanding that FCC alone held title. Again, we are not persuaded that Old 3100
Woodward’s specific authority to convey the easement can be inferred from this general
statement. The issue in Summers was the application of the statute of frauds to the agreement
between the plaintiff and the defendants, not the conveyance of a physical encumbrance on real
property. Moreover, the JV Agreement provided that the development would take place in
phases, with a schedule in which FCC would deed property to Belmar at specific stages. This
schedule indicates that the parties did not intend for Belmar to acquire property rights over the
entire block from the outset.
Plaintiff acknowledges that “[w]hether the parties have created a joint venture or some
other form depends on their intention, as expressed in the contract.” However, plaintiff gives
greater emphasis to its general argument that the parties intended to create a joint venture than to
the specific question of whether the parties intended for Old 3100 Woodward to have authority
to grant the easement. “[W]hen parties have freely established their mutual rights and
obligations through the formation of unambiguous contracts, the law requires this Court to
enforce the terms and conditions contained in such contracts, if the contract is not contrary to
public policy.” Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich. 206,
213; 737 NW2d 670 (2007) (quotation marks and citation omitted). As the Michigan Supreme
Court stated in St Clair Intermediate Sch Dist v Intermediate Ed Ass’s/Mich Ed Ass’n, 458 Mich.
540, 557-558; 581 NW2d 707 (1998):
Under the common law of agency, in determining “[w]hether an agency
has been created,” we consider “the relations of the parties as they in fact exist
under their agreements or acts” and note that in its broadest sense agency
“includes every relation in which one person acts for or represents another by his
authority.” Saums v Parfet, 270 Mich. 165, 170-171; 258 N.W. 235 (1935). We
further recognized in Saums that “[t]he characteristic of the agent is that he is a
business representative. His function is to bring about, modify, affect, accept
performance of, or terminate contractual obligations between his principal
and third persons.” Id. at 172; 258 N.W. 235.
In consideration of the Court’s statement that a court must consider “the relations of the parties
as they in fact exist under their agreements or acts,” we conclude that the scope of Old 3100
Woodward’s agency was defined not by general principles pertaining to joint ventures, but by
the terms of the JV Agreement.
The trial court found that Summers was distinguishable from the instant case because
¶ 7L of the JV Agreement disclaimed a partnership or agency relationship between FCC and
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Belmar, the predecessor to Old 3100 Woodward. Plaintiff argues that the trial court
misconstrued ¶ 7L, which provides:
The relationship between the parties shall be limited to the performance of
the development contract in accordance with the terms of this agreement. This
agreement shall be construed and deemed to be a Joint Venture for the sole
purpose of carrying out the development contract. Nothing herein shall be
construed to create a general partnership or master/agent relationship between the
parties or to authorize either party to bid for or to undertake any other contracts
for the other party, except as herein designated. It is agreed, however, that
Belmar Development Group, LLC, and/or its affiliate has and shall maintain a
majority interest, and may assign such interest for its benefit, as well as the joint
benefit of the parties hereto.
Plaintiff argues that the trial court placed undue emphasis on the third sentence of ¶ 7L by
reading this sentence to negate fully the existence of a partnership or master-agent relationship.
Plaintiff argues that when the third sentence is considered in conjunction with the rest of the
paragraph, the clear meaning is that the parties formed a joint venture and principal-master
relationship for the limited purpose of developing the property, but the parties did not form a
general partnership or agency relationship for any other purpose. We agree that this is the most
reasonable interpretation of the third sentence, but that does not resolve the question regarding
whether Old 3100 Woodward’s agency extended to granting easements on property owned by
FCC.
Plaintiff contends that the authority to grant easements is implied by the following three
paragraphs:
[¶ 7A] Belmar . . . shall join with the Fraternal Civic Center in the
development and construction of a mixed use project, situated upon the subject
land according to the terms and conditions hereinafter contained.
* * *
[¶ 7F] In conjunction with Fraternal Civic Center, Belmar . . . shall
prepare a Master Site Plan to be submitted to the City of Detroit – Planning and
Development Department, including a new lodge headquarters and upon approval
of same by the City, Belmar . . . shall pay to Fraternal Civic Center an additional
$250,000.00. Upon payment of the additional $250,000.00, Fraternal Civic
Center shall provide access to and convey by deed, contract or assignment the lots
as agreed upon in the Master Site Plan and identified as Phase II.
* * *
[¶ 7J] The parties to this agreement agree that the final decisions with
respect to the scope, plans, and performance of the subject matters contained
herein shall be vested with Belmar . . . except for the new lodge building; and as
relates to the old lodge facility, no contemplated use shall be planned
incompatible with the objectives and principles of the lodges.
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We are not persuaded that these provisions, including the provision authorizing Belmar to
prepare the master site plan, granted authority to convey easements burdening property that was
owned by FCC and that was not part of the property under development by the joint venture.
Lots 7, 8, and 9 were parcels adjacent to what would become the Crystal Lofts property and
owned by Old 3100 Woodward’s partner in developing the future Crystal Lofts property, but
these circumstances do not permit a reasonable reading that Old 3100 Woodward was permitted
to make conveyances of that property, especially without notice to FCC’s successors in interest.
Accordingly, neither Old 3100 Woodward’s status as a member of the joint venture nor the scope
of Old 3100 Woodward’s performance of the joint venture empowered Old 3100 Woodward to
convey the trash easement or the parking easement.
Plaintiff argues that the Second JV Amendment implicitly recognized Old 3100
Woodward’s authority to grant the easements in the statement, “Woodward has delivered to
Fraternal a Master Site Plan which has been approved by Fraternal and the City of Detroit-
Planning and Development . . . .” (Emphasis added.) Plaintiff states that this provision gave
Old 3100 Woodward broader rights than Belmar held. We are not persuaded that this statement
can reasonably be construed as FCC’s endorsement or approval of every action Old 3100
Woodward undertook to accomplish obtaining approval.
Plaintiff cites Omnicom of Mich v Giannetti Investment Co, 221 Mich. App. 341; 561
NW2d 138 (1997), for the principle that a partner’s signing of a contract on behalf of a
partnership is binding on the partnership even if the contract is executed in the name of only one
partner. In Omnicom, id. at 343, one of the defendants was a general partnership that owned and
operated an apartment complex. Two of the general partners, Jerry Pruzinsky and Anne Marie
Pruzinsky, entered into an installation agreement and access agreement with the plaintiff, a cable
television provider, enabling the plaintiff to install and maintain a cable-television service for the
apartment complex and its tenants. Id. A third general partner, Silvio Giannetti, denied the
plaintiff access to the property in violation of the agreement. Id. The defendants argued that the
Pruzinskys did not sign the agreement in the partnership name, and thereby failed to bind the
partnership. Id. at 344. This Court’s decision in Omnicom was based on the Uniform
Partnership Act, MCL 449.1 et seq., specifically MCL 449.9(1), which provides:
Every partner is an agent of the partnership for the purpose of its business,
and the act of every partner, including the execution in the partnership name of
any instrument, for apparently carrying on in the usual way the business of the
partnership of which he is a member binds the partnership, unless the partner so
acting has in fact no authority to act for the partnership in the particular matter,
and the person with whom he is dealing has knowledge of the fact that he has no
such authority.
This Court rejected the defendants’ argument that this provision should be construed “to mean
that a partner cannot bind a partnership when the partner signs in his own name rather than the
partnership name.” Omnicom, 221 Mich. App. at 344-346. This Court held that the Pruzinskys’
signatures were binding because the evidence established that they intended to contract on behalf
of the partnership rather than for themselves individually, and because contracting for cable
service was clearly related to the course of the partnership’s business. Id. at 346. Omnicom is
distinguishable from the instant case, because Old 3100 Woodward did not have authority to
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convey easements on FCC’s property. Although the access and installation agreements in
Omnicom involved granting an easement so that the plaintiff could physically install the cable-
system hardware, this easement was on the property owned by the general partnership. See id. at
343, 347.
In sum, the JV Agreement conferred on Belmar a degree of authority in developing the
block pursuant to its agreement with FCC, but that authority did not extend to granting an
easement across property still owned by FCC. There is no valid writing, properly executed,
conveying the trash easement and parking easement to plaintiff or its predecessors in ownership
of Lots 5, 6, and 1. Accordingly, plaintiff cannot enforce the easements against defendant.
IV. 2014 QUITCLAIM DEED
Plaintiff argues that the trial court erred in concluding that the 2014 quitclaim deed that
FCC issued to Crystal Lofts RE did not create the easements anew or ratify Old 3100
Woodward’s prior declaration of the easements. The proper interpretation of the language in a
deed is reviewed de novo. In re Rudell Estate, 286 Mich. App. 391, 402-403; 780 NW2d 884
(2009).
“In order to create an express easement, there must be language in the writing
manifesting a clear intent to create a servitude.” Forge, 458 Mich. at 205. “Any ambiguities are
resolved in favor of use of the land free of easements.” Id. “Where the intent to create an
easement is not clear, the issue is to be resolved in favor of use of the land free of an easement.”
Id. at 209.
In Lakeside Oakland Dev, LC v H & J Beef Co, 249 Mich. App. 517, 520; 644 NW2d 765
(2002), the plaintiff seller sold a parcel of property to buyers who planned to construct a
restaurant. The buyers wanted an easement from the parcel they were purchasing to a side street,
which would allow customers convenient ingress and egress. Id.
Before the closing, the realtors sent the buyers a packet of closing documents,
including the survey map highlighting the easement. The seller had executed both
a warranty deed with an attached legal description of the property on which the
Arby’s was to be built and a closing statement. However, there was no reference
to an easement, or legal description of an easement, contained in the warranty
deed or on the attached legal description of the parcel being sold. The warranty
deed indicated that the property to be conveyed was as described in the attached
rider. The attached legal description of the parcel being sold referred to the
warranty deed. There was no document providing that the seller was granting the
buyers an easement over any specific area, and the survey map contained neither
language to that effect nor the seller’s signature. [Id. at 520-521.]
This Court described the circumstances in which the real-estate agreement was closed:
The seller was not present at the scheduled closing, which was handled by
the realtors, a title company, the buyers and the buyers’ realtor. The buyers
inquired about the easement, and the title company insisted on a legal description
of the easement before closing the sale. The realtors promised the buyers that
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there would be no problem, and that they would take care of the matter by
obtaining the legal description of the easement. The warranty deed, other closing
documents, and the buyers’ payment were placed in escrow with the title
company pending the realtors’ submission of the easement description. On May
24, 1996, the parties closed in escrow when the realtors provided the title
company with a legal description of the easement. The easement description,
prepared for the realtors by their surveyor on the surveyor’s letterhead, did not
refer to the warranty deed or have the signature of the seller. The easement
description contained no language indicating that the sellers were granting the
described easement to the buyers. The buyers’ payment was released from
escrow to the seller. The title company recorded the warranty deed with the two
attached legal descriptions (three pages consecutively recorded). [Id. at 521.]
The buyers believed that the sale of the land with the easement was complete. Id. After they
began construction of the restaurant, the seller advised the buyers that they had no easement
rights and that they were trespassing on the location of the purported easement. Id. at 522. The
seller accused the buyers of “surreptitiously attach[ing] the easement description to the warranty
deed” in order to obtain an easement that the seller never agreed to sell. Id. Although the
realtors asserted that the seller “did in fact approve the easement description and the conveyance
of the easement,” they were unable to produce written authorization from the seller to grant the
easement. Id. The seller filed suit against the buyer to quiet title and to void any recorded
easement. Id. The trial court granted summary disposition to the seller and voided the easement
on the ground that the buyers failed to produce a written agreement in satisfaction of MCL
566.106. Lakeside Oakland Dev, 249 Mich. App. at 523.
This Court concluded that “the documents that exist in the present case do not manifest a
clear intent of the seller to create the easement claimed by the buyers.” Id. at 525. This Court
explained:
The warranty deed does not mention the transfer of an easement. The warranty
deed does refer to an attached rider as constituting the description of the property
being transferred, and the legal description of the fee simple being transferred
refers to the deed; however, the fee description does not mention an easement.
The document containing the legal description of the easement does not refer to
the warranty deed or the fee simple description, nor does it contain the seller’s
signature or any language indicating that the seller was transferring an easement
to the buyers. The survey map contained no language granting an easement or a
signature of the seller. Standing alone, the easement description is just that, an
easement description. Moreover, even if the documents manifested an intent to
transfer an easement, the seller claims, and it appears to be undisputed, that it
never provided realtors with written authority to grant the easement as required by
MCL 566.106. Therefore, if the statute of frauds were applied in the present case,
the seller would be entitled to judgment as a matter of law as determined by the
trial court. [Id. at 525-526.]
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This Court concluded, however, that there were material questions of fact regarding the buyers’
defense that the seller was equitably estopped from asserting the statute of frauds. Id. at 526-
529.
“A quitclaim deed conveys any and all right, title, and interest that a grantor has in the
lands described in the deed.” VanderWerp v Plainfield Charter Twp, 278 Mich. App. 624, 630;
752 NW2d 479 (2008). The quitclaim deed at issue states that FCC “does hereby quit claim to
CRYSTAL LOFTS REO, LLC . . . the following described premises situated in the City of
Detroit . . . to wit: See Exhibit ‘A’ attached hereto and made a part hereof; together with all and
singular the tenements, hereditaments and appurtenances thereunto belonging or in anywise
appertaining . . . .” Exhibit A states the legal descriptions of Parcel 1 and Parcel 2 (i.e., Lots 1, 5
and 6), and includes the following description of “EASEMENT PARCEL”:
Non-exclusive easement(s) as created, limited and defined in declaration of
Easement recorded in Liber 45720, page 296 and in Liber 46122, page 1049,
Wayne County Records.
This language does not independently convey any easement interest in Lots 7, 8, and 9. It
describes the easements as they were created in the 2006 and 2007 declarations, but these
declarations were not validly executed and recorded. The quitclaim deed conveys to Crystal
Lofts whatever interest FCC might still hold in Lots 5, 6, and 1, including any easement rights
related to Lots 5, 6, and 1. There was no language granting an easement, only a statement that
Crystal Lofts received the easement held by Lots 5, 6, and 1. The trial court correctly stated that
this language “merely describes easements that were alleged to have already been granted, . . .
[which] the court already found to be invalid.” The trial court’s interpretation of the quitclaim
deed was consistent with the Supreme Court’s holding in von Meding, 319 Mich. at 609, that the
phrase “subject to all easements of record for right of way” in a deed meant “subject to all valid
easements of record.” Similar to the attached rider in Lakeside Oakland Dev, Exhibit A merely
referred to a previously-recorded easement, without stating that Crystal Lofts REO was granted
an easement on the burdened property, or otherwise referencing the burdened property and
FCC’s ownership.
Additionally, with respect to plaintiff’s argument that FCC ratified the conveyances of
easement, “[a]cquiescence and ratification are based on a party’s knowledge of a prior action and
manifest an intent to abide by the action.” In re Beglinger Trust, 221 Mich. App. 273, 277; 561
NW2d 130 (1997). The bare recital of the “easement(s) as created” language does not reflect
any intent to validate easements that were invalidly created. Nothing in the quitclaim deed
reflects FCC’s intent to ratify the 2006 and 2007 declarations.
V. BONA FIDE PURCHASER FOR VALUE
MCL 565.29 provides:
Every conveyance of real estate within the state hereafter made, which
shall not be recorded as provided in this chapter, shall be void as against any
subsequent purchaser in good faith and for a valuable consideration, of the same
real estate or any portion thereof, whose conveyance shall be first duly recorded.
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The fact that such first recorded conveyance is in the form or contains the terms
of a deed of quit-claim and release shall not affect the question of good faith of
such subsequent purchaser, or be of itself notice to him of any unrecorded
conveyance of the same real estate or any part thereof.
In Wells Fargo Bank, NA v SBC IV REO, LLC, 318 Mich. App. 72, 110; 896 NW2d 821 (2016),
this Court stated:
Under MCL 565.29, a bona fide or good-faith purchaser for value of an
interest in real property may take priority over a prior conveyed interest. Penrose
v McCullough, 308 Mich. App. 145, 152; 862 NW2d 674 (2014). “And a good-
faith purchaser is one who purchases [property] without notice of any defect in
the vendor’s title.” Id. A person having notice of a possible defect in title who
fails to make further inquiry into the potential rights of a third party does not
constitute a good-faith purchaser. Id. at 152–153; 862 NW2d 674. Notice, which
can be actual or constructive, “is whatever is sufficient to direct attention of the
purchaser of realty to prior rights or equities of a third party and to enable him to
ascertain their nature by inquiry.” Id. (citation and quotation marks omitted).
Constructive notice involves imputed notice to a person regarding all matters
properly of record. Id.
Defendant argues that plaintiff had notice of a defect in the conveyance of easement because the
easement was never recorded against the burdened property. Plaintiff argues that the 2014 FCC
quitclaim deed is indexed in the Wayne County Register of Deeds, but does not assert that the
easements were discoverable to a person searching the chain of ownership to Lots 7, 8, and 9. If
plaintiff had attempted to verify the easements as described in the quitclaim deed, it would have
discovered that the grantor was not the owner of record of the burdened property. Accordingly,
plaintiff is not a bona fide purchaser for value.
Affirmed.
/s/ Michael J. Kelly
/s/ Kathleen Jansen
/s/ Patrick M. Meter
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