B & B Investment Group v. Gitler

581 N.W.2d 17 (1998) 229 Mich. App. 1

B & B INVESTMENT GROUP, Plaintiff-Appellee,
v.
Pat GITLER and Mel Gitler, Defendants-Appellants.

Docket No. 189751.

Court of Appeals of Michigan.

Submitted September 9, 1997, at Detroit. Decided March 24, 1998, at 9:00 a.m. Released for Publication July 14, 1998.

Sills, Law, Essad, Fiedler & Charboneau, P.C. by Ernest J. Essad, Jr., and David W. Geiss, Bloomfield Hills, for Plaintiff-Appellee.

Cox, Hodgman & Giarmarco by William H. Horton and Linda M. Watson, Troy, for Defendants-Appellants.

Before HOLBROOK, P.J., and WHITE and R.J. DANHOF^[*], JJ.

PER CURIAM.

In this statutory slander of title action, defendants appeal by leave granted the circuit court's order affirming the district court's judgment awarding plaintiff $30,000 in attorney fees and $7,500 in exemplary damages and various other orders of the district court. We affirm the award of attorney fees, vacate the award of exemplary damages, and remand in part.

I

Following a six-day bench trial, the district court issued an opinion and order from which we take these facts. Plaintiff^[1] and defendant Pat Gitler (defendant) entered into a business relationship during either 1990 or 1991. The parties contemplated that plaintiff and defendant would join together to purchase real estate from mortgage foreclosures and sheriff's sales. Before their venture, the two were in competition with one another for selected properties and both were experienced in these types of real estate transactions.

During the course of the relationship, a dispute arose over the disbursement of certain funds from two particular pieces of property unrelated to this lawsuit. The parties were unable to resolve their dispute, and defendant caused claims of interest to be filed against seven other properties owned by plaintiff at that time. The claims of interest were filed as a matter of public record with the Oakland County Register of Deeds.

In March 1992, plaintiff filed suit, seeking removal of the claims of interest and monetary and equitable relief for the alleged slander of title. After hearings concerning the dispositive motions, the circuit court, in late June 1992, entered an order discharging the claims of interest, finding that the claims were discharged, released, and held for naught ab initio. The circuit court's order did not address the remaining slander of title claim, and, after mediation, the case was removed from the circuit court to the district court for trial.

The district court found no cause of action against defendant's husband, Mel Gitler. The court found that defendant had slandered the title of plaintiff's seven properties with malicious intent and in wilful and wanton disregard of plaintiff's rights under circumstances in which she had no cognizable interest in the properties, was aware that it was improper to file such claims of interest, and had been advised not to do so. The court further found that defendant made several public statements that demonstrated her intention to injure plaintiff and its business. The court awarded plaintiff $30,000 in attorney fees and $7,500 in exemplary damages.

II

Defendants^[2] first argue that exemplary damages are not available under the slander of title statute, M.C.L. § 565.108; M.S.A. § 26.1278. This is an issue of first impression, which we review de novo.^[3]Welch Foods, Inc. v. Attorney General, 213 Mich.App. 459, 461, 540 N.W.2d 693 (1995).

The primary goal of judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. Farrington v. Total Petroleum, Inc., 442 Mich. 201, 212, 501 N.W.2d 76 (1993). If the plain and ordinary meaning of the language is clear, judicial construction is normally neither necessary nor permitted. Heinz v. Chicago Rd. Investment Co., 216 Mich.App. 289, 295, 549 N.W.2d 47 (1996). If reasonable minds can differ concerning the meaning of a statute, judicial construction is appropriate. Heinz, supra. The court must look to the object of the statute and to the harm it is designed to remedy and must apply a reasonable construction that best accomplishes the purpose of the statute. Marquis v. Hartford Accident & Indemnity (After Remand), 444 Mich. 638, 644, 513 N.W.2d 799 (1994).

The language of a statute should be read in light of previously established rules of the common law, including common-law adjudicatory principles. Nummer v. Dep't of Treasury, 448 Mich. 534, 544, 533 N.W.2d 250 (1995). Well-settled common-law principles are not to be abolished by implication, and when an ambiguous statute contravenes common law, it must be interpreted so that it makes the least change in the common law. Marquis, supra. Conversely, legislation must be interpreted in conformance with its express terms, even if in conflict with the common law. Tryc v. Michigan Veterans' Facility, 451 Mich. 129, 136, 545 N.W.2d 642 (1996). Statutes in derogation of the common law are narrowly construed. Rusinek v. Schultz, Snyder & Steele Lumber Co., 411 Mich. 502, 507-508, 309 N.W.2d 163 (1981).

M.C.L. § 565.108; M.S.A. § 26.1278, which is part of the marketable record title act, M.C.L. § 565.101 et seq.; M.S.A. § 26.1271 et seq., provides:

No person shall use the privilege of filing notices hereunder for the purpose of slandering the title to land, and in any action brought for the purpose of quieting title to land, if the court shall find that any person has filed a claim for that reason only, he shall award the plaintiff all the costs of such action, including such attorney fees as the court may allow to the plaintiff, and in addition, shall decree that the defendant asserting such claim shall pay to plaintiff all damages that plaintiff may have sustained as the result of such notice of claim having been so filed for record.

A

In Michigan, slander of title claims have both a common-law and statutory basis. Slander of title has been recognized at common law since at least 1900 as a remedy for malicious publication of false statements that disparage a plaintiff's right in property. See 2 Cameron, Michigan Real Property Law (2d ed), Slander of Title, § 30.18, pp 1461-1462, and cases cited therein, including Harrison v. Howe, 109 Mich. 476, 67 N.W. 527 (1896), and Michigan Nat'l Bank-Oakland v. Wheeling, 165 Mich.App. 738, 419 N.W.2d 746 (1988).

To establish slander of title at common law, a plaintiff must show falsity, malice, and special damages, i.e., that the defendant maliciously published false statements that disparaged a plaintiff's right in property, causing special damages. See Sullivan v. Thomas Organization, PC, 88 Mich.App. 77, 82, 276 N.W.2d 522 (1979); Michigan Real Property Law, supra at 1461; 50 Am.Jur.2d, Libel and Slander, § 554, p. 847. Pecuniary or special damages must be shown in order to prevail on a claim. Id., citing Patten Corp. v. Canadian Lakes Development Corp., 788 F. Supp. 975 (W.D.Mich., 1991); anno.: What constitutes special damages in action for slander of title, 4 A.L.R. 4th 532, § 2, pp. 536-537 (noting that "the existence of special damages is an element of a cause of action for slander of title").

The same three elements are required in slander of title actions brought under M.C.L. § 565.108; M.S.A. § 26.1278. GKC Michigan Theaters, Inc. v. Grand Mall, 222 Mich.App. 294, 301, 564 N.W.2d 117 (1997). But see Stanton v. Dachille, 186 Mich.App. 247, 262, 463 N.W.2d 479 (1990) (stating that "the elements of slander of title are falsity of statement and malice").

In Michigan, special damages have been recognized to include litigation costs, see Chesebro v. Powers, 78 Mich. 472, 44 N.W. 290 (1889); impairment of vendibility, see Sullivan, supra at 85, 276 N.W.2d 522, and loss of rent or interest, Harrison, supra. See also 2 Stockmeyer, Michigan Law of Damages (2d ed), §§ 16B.30-16B.35, pp 16B.27-16B.29, and 50 Am Jur 2d, Libel and Slander, § 560, pp 853-855.

We note that there are only two reported slander of title cases in Michigan brought under M.C.L. § 565.108; M.S.A. § 26.1278, Stanton, supra,^[4] and GKC Michigan Theaters, supra.^[5] Exemplary damages have not been awarded in any Michigan slander of title case, either common-law or statutory. However, exemplary damage awards in intentional tort cases have been considered proper if they compensate a plaintiff for the humiliation, sense of outrage, and indignity resulting from injuries maliciously, willfully and wantonly inflicted by the defendant. Kewin v. Massachusetts Mut. Life Ins. Co., 409 Mich. 401, 419, 295 N.W.2d 50 (1980) (citing cases involving assault and battery and libel). The theory of these cases is that the reprehensibility of the defendant's conduct both intensifies the injury and justifies the award of exemplary damages as compensation for the harm done to the plaintiff's feelings. Id.

Nonetheless, where a cause of action is statutorily based, there must be a basis in the statute for awarding exemplary damages, i.e., either an express provision or a legislative history from which one could infer "a legislative intent to provide such an unusual remedy." Eide v. Kelsey-Hayes Co., 431 Mich. 26, 54-55, 427 N.W.2d 488 (1988) (Griffin, J.^[6]); Peisner v. Detroit Free Press, Inc., 421 Mich. 125, 134-135, n. 10, 364 N.W.2d 600 (1984). We conclude there is no such statutory basis here; there is neither an express provision nor a legislative history from which one could infer a legislative intent to provide exemplary damages. In enacting other statutes, the Legislature has included words expressly providing for exemplary damages where it has intended that they be recoverable. See Eide, supra at 55, 427 N.W.2d 488, and statutes there cited; see also n. 3, supra.

The Legislature having failed to include such language in this instant statute, we conclude that exemplary damages are not properly awarded under M.C.L. § 565.108; M.S.A. § 26.1278, and we vacate the trial court's award of exemplary damages in the amount of $7,500.

III

Defendants next argue that plaintiff is only entitled to attorney fees incurred up to the time the cloud on its titles was removed, which occurred when the circuit court entered an order discharging the claims of interest in late June 1992. Plaintiff argues that there is nothing in the statute's language limiting the attorney fees the court may award.

We reject defendants' argument. The plain language of the statute does not limit the award of attorney fees and grants the court discretion in awarding such fees; the statute states that "if the court shall find that any person has filed a claim for that reason [to slander the title to land] only, he shall award the plaintiff all the costs of such action, including such attorney fees as the court may allow." The statute contemplates recovery of attorney fees, at the court's discretion, expended in actions for slander of title, not simply to quiet title. Further, even though the claims of interest were discharged in late June 1992, the trial of the slander of title claim was not held until November and December of 1993. And, while plaintiff did not prevail on the separate damage issues at trial, it was entitled to proceed to trial of the slander of title claim to recover the attorney fees and costs incurred as special damages and in seeking to recover these amounts. The trial court, in its discretion, awarded less than half of the attorney fees plaintiff requested. Under these circumstances, we conclude that the trial court did not abuse its discretion in its award of attorney fees.

IV

Defendants next argue that they are entitled to costs and attorney fees under the offer of judgment rule, MCR 2.405, because the average offer of $14,250 was more than the adjusted verdict once the improper exemplary damages and attorney fees are deleted and because the trial court found no cause of action against Mel Gitler.

In August 1993, defendants jointly offered to stipulate to entry of judgment in the amount of $3,500. Plaintiff rejected defendants' offer and counteroffered, stating it would agree to entry of judgment in the amount of $25,000. Defendants did not respond, thus rejecting plaintiff's counteroffer. Trial began on November 8, 1993. There is no dispute that the average offer was $14,250. The verdict as determined by the district court was for $37,500 and the adjusted verdict was $45,290.64.

We have vacated only the exemplary damage award of $7,500 and have upheld the award of attorney fees of $30,000 under the statute, thus the average offer remains less than the adjusted verdict.

Concerning Mel Gitler individually, defendants' brief on appeal simply asserts that he is entitled to sanctions because plaintiff did not recover against him. There is no discussion or analysis of the application of MCR 2.405 in multiple party situations. Considering his failure to support his argument, and because defendants submitted a joint offer of judgment, we conclude that the trial court did not err in considering the aggregate recovery in determining Mel Gitler's entitlement to sanctions under the rule. J C Building Corp. II v. Parkhurst Homes, Inc., 217 Mich.App. 421, 424-426, 552 N.W.2d 466 (1996).

V

Defendants next argue that the district court erred in awarding plaintiff prejudgment interest, in that the verdict for plaintiff was for costs and attorney fees. We review de novo an award of prejudgment interest under M.C.L. § 600.6013; M.S.A. § 27A.6013.^[7]Beach v. State Farm Mut. Automobile Ins. Co., 216 Mich.App. 612, 623-624, 550 N.W.2d 580 (1996). The prejudgment interest statute is remedial and to be construed liberally in favor of the plaintiff. Phinney v. Perlmutter, 222 Mich.App. 513, 541, 564 N.W.2d 532 (1997). The purpose of prejudgment interest is to compensate the prevailing party for expenses incurred in bringing actions for money damages and for any delay in receiving such damages. Phinney, supra at 541, 564 N.W.2d 532.

The slander of title statute provides in pertinent part:

[I]n any action brought for the purpose of quieting title to land, if the court shall find that any person has filed a claim for that reason [of slandering the title to land] only, he shall award the plaintiff all the costs of such action, including such attorney fees as the court may allow to plaintiff, and in addition, shall decree that the defendant asserting such claim shall pay to plaintiff all damages that plaintiff may have sustained as the result of such notice of claim having been so filed for record. [MCL 565.108; MSA 26.1278.]

Litigation costs, including attorney fees, have been held to constitute special damages recoverable in slander of title cases. Sullivan, supra at 85, 276 N.W.2d 522; Chesebro, supra at 479, 44 N.W. 290; see also anno.,supra, 4 A.L.R. 4th 532, § 9, pp. 560-562.

In Liddell v. DAIIE, 102 Mich.App. 636, 652-653, 302 N.W.2d 260 (1981), this Court held that prejudgment interest may be granted on an award of costs and attorney fees under the no-fault act for unreasonable refusal to pay or delay in making payments. In Harvey v. Gerber, 153 Mich.App. 528, 530, 396 N.W.2d 470 (1986), this Court held that prejudgment interest under M.C.L. § 600.6013; M.S.A. § 27A.6013 does not apply to attorney fees awarded under the Michigan Consumer Protection Act (MCPA), because the MCPA allows for the recovery of "reasonable attorney fees" in addition to damages, thus sufficiently defraying the costs of litigation. The Harvey Court distinguished Liddell, and no-fault cases generally, on the basis that "under that act attorney fees are imposed only in limited circumstances to penalize recalcitrant insurers for unreasonably refusing to pay benefits." In Janda v. Detroit, 175 Mich.App. 120, 131, 437 N.W.2d 326 (1989), this Court held that the award of interest on attorney fees is discretionary.

Because the instant statute is similar to the no-fault act in that it provides for attorney fees only in the limited circumstance where the claim of interest is filed solely for the purpose of slandering title, and because the trial court here expressly found that defendant acted with malicious intent, in willful and wanton disregard of plaintiff's rights, we conclude that the trial court did not abuse its discretion in awarding prejudgment interest on its award of attorney fees under the statute. However, because we have vacated the award of exemplary damages, remand is necessary for recalculation of prejudgment interest.

VI

Defendants' final argument is that they are entitled to an evidentiary hearing with respect to the reasonableness of attorney fees awarded during the contempt proceedings because the award of $12,500 was clearly excessive and without a factual basis. Defendants argue that the trial court failed to consider the issue of reasonableness and simply approved plaintiff's requests without conducting an inquiry. Defendants further argue that on remand the case be assigned to a different judge because of the trial judge's personal prejudice against them.

Plaintiff argues that defendants received adequate evidentiary hearings with respect to all of the attorney fees awarded for contempt sanctions and that, at three different proceedings, the trial court weighed unrebutted evidence presented by plaintiff's counsel and made factual findings concerning the reasonableness of the attorney fees plaintiff incurred as a result of defendant's filing of false liens in violation of the court's contempt order.

We review an award of attorney fees for abuse of discretion. Petterman v. Haverhill Farms, 125 Mich.App. 30, 33, 335 N.W.2d 710 (1983). In Wilson v. General Motors Corp., 183 Mich.App. 21, 42-43, 454 N.W.2d 405 (1990), this Court observed:

Where the opposing party challenges the reasonableness of the fee requested, the trial court should inquire into the services actually rendered prior to approving the bills of costs.... Although a full-blown trial is not necessary, an evidentiary hearing regarding the reasonableness of the fee request is.

In Howard v. Canteen Corp., 192 Mich.App. 427, 437, 481 N.W.2d 718 (1992), this Court further noted:

Where attorney fees are to be awarded, the court must determine the reasonable amount of fees according to the nonexclusive list of factors and guidelines set forth in Wood v. DAIIE [413 Mich. 573, 588, 321 N.W.2d 653 (1982) ]. While the court is not required to detail its findings regarding each specific factor, it is required to make findings of fact with regard to the attorney fee issue.

The most useful starting point for determining the amount of a reasonable attorney fee is the number of hours reasonably expended on the case multiplied by a reasonable hourly rate. The party seeking the fee bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.

In Howard, the trial court granted attorney fees after the plaintiff's counsel had submitted affidavits and other documentary evidence in support of her requested fees and oral arguments had been heard. In remanding for an evidentiary hearing regarding the issue of attorney fees, is court instructed the court to allow the plaintiff's counsel to present any evidence regarding her fee request and to allow the defendants the opportunity to challenge that evidence and directed the court to consider the Wood factors in making findings regarding the actual time spent on the case and in determining a reasonable attorney fee.

Similarly, in Petterman, supra, this Court remanded for an evidentiary hearing regarding the reasonableness of the attorney fee as a result of the trial court having accepted an itemized bill for attorney fees on its face without actually considering the issue of reasonableness.

A

In the instant case, the district court did not hold an evidentiary hearing regarding the attorney fee issue at either contempt hearing. At the first contempt hearing, the district court adopted plaintiff's counsel's oral representations of the number of hours expended (15½) and granted fees based on the hourly rates defense counsel quoted for himself and an associate, (9½ hours at $200 an hour for lead counsel and 6 hours for an associate at $100 an hour), defense counsel's objections notwithstanding. At the second contempt hearing, the district court granted plaintiff's request for $5,000 in attorney fees, with no inquiry on the record into the reasonableness of the fee request, notwithstanding defense counsel's challenge to the fee award. At the third contempt hearing, the district court apparently ordered the payment of a further $5,000 in attorney fees without any basis for that award being placed on the record.

Under these circumstances, we remand for an evidentiary hearing to determine reasonable attorney fees. The trial court must consider the factors set forth in Wood v. DAIIE, supra, in making its factual findings regarding the actual time spent on the case and determining a reasonable attorney fee.

We do not find it necessary to assign this case to a different judge on remand. A party who challenges a judge on the basis of bias or prejudice bears a heavy burden of overcoming the presumption of judicial impartiality. In re Forfeiture of $1,159,420, 194 Mich.App. 134, 151, 486 N.W.2d 326 (1992). An actual showing of personal prejudice is required before a trial judge will be disqualified. Id.; see also People v. Evans, 156 Mich.App. 68, 72, 401 N.W.2d 312 (1986). Although defendants claim that the district court judge should be disqualified under MCR 2.003(B)(1) because of his personal prejudice against defendants, the record fails to show actual bias or prejudice on the part of the district court judge.

We affirm the trial court's award of $30,000 in attorney fees, reverse the award of $7,500 in exemplary damages, and remand for a recalculation of prejudgment interest and for an evidentiary hearing to determine reasonable attorney fees, if any, to be awarded as a result of the contempt hearings.

NOTES

[*] Former Court of Appeals judge, sitting on the Court of Appeals by assignment.

[1] Plaintiff, a Michigan copartnership, is a private investment firm that acquires, renovates, and resells residential and commercial properties obtained at foreclosure sales by the county sheriff.

[2] Although aggrieved by only one of the rulings appealed, Mel Gitler is included generally as an appellant in all filings in this Court.

[3] We note that this issue is not likely to arise again because future slander of title suits will likely be brought under M.C.L. § 565.25; M.S.A. § 26.543 and M.C.L. § 600.2907a; M.S.A. § 27A.2907a, which took effect March 31, 1997, while this appeal was pending. M.C.L. § 600.2907a; M.S.A. § 27A.2907a, expressly permits the award of exemplary damages to an owner of property for "encumbering property through the recording of a document without lawful cause with intent to harass or intimidate any person" in violation of M.C.L. § 565.25; M.S.A. § 26.543.

[4] In Stanton, this Court affirmed the lower court's grant of summary disposition for the plaintiffs where the defendants failed to show that the plaintiffs' claims of interest were filed with malice and an intent to injure the defendants. 186 Mich.App. at 262-263, 463 N.W.2d 479.

[5] In GKC, this Court reversed the circuit court's grant of summary disposition for the defendant on the basis that issues of material fact remained regarding whether the filing of the invalid notice of termination was a substantial factor in the purchaser's decision to delay the sale of the property and held that the substantial factor test set forth in 3 Restatement Torts, 2d, § 632, p 352, is the appropriate test to determine whether causation exists in a slander of title claim. 222 Mich.App. at 301-304, 564 N.W.2d 117.

Both Stanton and GKC, supra, involved summary disposition and issues not pertinent here. Stanton stated that "[t]he elements of slander of title are falsity of statement and malice," citing one case that involved a common-law slander of title claim. 186 Mich.App. at 262, 463 N.W.2d 479. In GKC, a case decided during the pendency of this appeal, this Court stated: "In order to prove its slander of title claim, plaintiff must establish that defendant ``maliciously published false matter disparaging [plaintiff's] title, causing it special damages.' 222 Mich.App. at 301, 564 N.W.2d 117.

Assuming that special damages are a required element in a statutory slander of title action, plaintiff established special damages in the form of attorney fees expended to remove the cloud from the titles. See Sullivan, supra at 85, 276 N.W.2d 522; GKC, supra at 301, 564 N.W.2d 117.

[6] The majority opinion agreed with Justice Griffin's partial dissent with respect to the question whether exemplary damages could be awarded separate from actual damages for violations of the Civil Rights Act. 431 Mich. at 28-29, 38, 427 N.W.2d 488.

[7] For cases filed on or after October 1, 1993, M.C.L. § 600.6013(6); M.S.A. § 27A.6013 was amended to provide in pertinent part:

Interest under this subsection shall be calculated on the entire amount of the money judgment, including attorney fees and other costs.