Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Geo Finance, LLC v. University Square 2751, LLC

United States District Court, E.D. Michigan, Southern Division

January 22, 2015

GEO FINANCE, LLC, Plaintiff,
v.
UNIVERSITY SQUARE 2751, LLC, Defendant

For GEO Finance, LLC, Plaintiff: Paul D. Vink - NOT SWORN, Bose McKinney & Evans, Indianapolis, IN; H. Adam Cohen, Steinhardt, Pesick, Birmingham, MI.

For University Square 2751 LLC, Defendant, ThirdParty Plaintiff: Shereef H. Akeel, Akeel & Valentine, Troy, MI.

For First American Title Insurance Agency, a California corporation, Defendant, ThirdParty Defendant: Phillip J. Neuman, Couzens, Lansky, Farmington Hills, MI.

OPINION AND ORDER DENYING MOTION FOR RECONSIDERATION

Honorable David M. Lawson, United States District Judge.

This matter is before the Court on the motion by defendant and former third-party plaintiff University Square 2751, LLC for reconsideration of the Court's December 29, 2014 order granting third-party defendant First American Title Insurance Company's motion to dismiss. University Square contends that reconsideration is warranted because the Court adjudicated the motion under Federal Rule of Civil Procedure 12(b)(6) rather than Rule 56, despite the fact that the Court previously entered an order converting the motion to dismiss to a motion for summary judgment. University Square argues that genuine issues of fact remain on several critical points, which were addressed in the supplemental briefing that the parties submitted in response to the Court's prior orders. The Court finds that University Square has identified a palpable defect in the Court's ruling as a result of the application of the wrong standard of review. However, it has not demonstrated that " correcting the defect will result in a different disposition of the case." E.D. Mich. LR 7.1(h)(3). The Court therefore will deny the motion for reconsideration.

I.

Motions for reconsideration may be granted pursuant to E.D. Mich. LR 7.1(h)(1) when the moving party shows (1) a " palpable defect, " (2) that misled the court and the parties, and (3) that correcting the defect will result in a different disposition of the case. E.D. Mich. LR 7.1(h)(3). A " palpable defect" is a defect which is obvious, clear, unmistakable, manifest, or plain. Mich. Dep't of Treasury v. Michalec, 181 F.Supp.2d 731, 734 (E.D. Mich. 2002) (citations omitted). " Generally . . . the court will not grant motions for rehearing or reconsideration that merely present the same issues ruled upon by the court." E.D. Mich. LR 7.1(h)(3).

University Square's motion must be denied because the plaintiff has failed to show that a different outcome would result if the Court applied the Rule 56 (summary judgment) standard of review rather than the Rule 12(b)(6) (motion to dismiss) standard. In its previous opinion, the Court concluded that " [b]ased on the undisputed facts alleged in the pleadings and relied upon by the parties' in their briefing, there is no set of facts under which the claims in the original complaint or third-party complaint would 'arguably fall within the coverage of the policy.' Royce v. Citizens Ins. Co., 219 Mich.App. 537, 542-43, 557 N.W.2d 144, 146-47 (1996)." Op & Order [dkt. #44] at 11. Having reconsidered the parties' positions in light of the proper standard of review, the Court finds that conclusion to be correct.

II.

Summary judgment is appropriate " if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). When determining whether fact issues exist, " [t]he court must view the evidence and draw all reasonable inferences in favor of the non-moving party." Alexander v. CareSource, 576 F.3d 551, 557-58 (6th Cir. 2009). The question that must be answered is " whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Irrelevant or unnecessary factual disputes do not create " genuine" issues of " material" fact. St. Francis Health Care Centre v. Shalala, 205 F.3d 937, 943 (6th Cir. 2000). A fact is " material" if its resolution affects the outcome of the lawsuit. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir. 2001). " Materiality" is determined by the substantive law claim. Boyd v. Baeppler, 215 F.3d 594, 599 (6th Cir. 2000). An issue is " genuine" if a " reasonable jury could return a verdict for the nonmoving party." Henson v. Nat'l Aeronautics & Space Admin., 14 F.3d 1143, 1148 (6th Cir. 1994) (quoting 477 U.S. at 248). In a defensive motion for summary judgment, the party who bears the burden of proof must present a jury question as to each element of the claim. Davis v. McCourt, 226 F.3d 506, 511 (6th Cir. 2000). Failure to prove an essential element of a claim renders all other facts immaterial for summary judgment purposes. Elvis Presley Enters., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 895 (6th Cir. 1991).

In its motion for reconsideration, University Square contends that summary judgment on its third-party complaint was improper because genuine issues of fact remain on the following questions: (1) whether " Exception 2" (which excludes coverage for " [e]asements, liens or encumbrances, or claims thereof, not shown by the Public Records") should have been deleted from the policy of insurance issued by First American, under the terms of the purchase agreement between University Square and its seller of the property; (2) whether " Exception 2" applies to the claims asserted in the original complaint by plaintiff GEO Finance, LLC; and (3) whether the coverage under the policy extends to the claims raised in the original complaint. None of those alleged disputes suffices to show that a genuine issue of material fact remains as to the claims in the third-party complaint.

A. Enforceability of Exception 2

As an initial matter, any dispute as to whether, under certain terms of the purchase agreement, " Exception 2" should have been deleted from the policy that was issued by First American is immaterial, because the claims in the third-party complaint are based upon an alleged breach of the title insurance policy as issued, and the third-party complaint does not allege any breach of the purchase agreement. As the Court noted in its prior opinion:

University Square has not pointed to anything in the pleadings or elsewhere to suggest that the Exception 2 was deleted. Nor is there any doubt that the copy of the policy that was attached to the complaint fully and faithfully represents the terms of the contract of insurance that existed between the parties. In fact the third-party complaint alleges that " [t]he Policy [attached as Exhibit A] was in effect, by its terms, and afforded University Square insurance against liability in accordance with the terms, conditions, limitations, and amounts defined in the Policy." Third-Party Compl. ¶ 9.

Op & Order [dkt. #44] at 14. Regardless of whether " Exception 2" should have been deleted, it remains the undisputed position of all the parties that it was not deleted. Because it was not deleted, it became a part of the contract that University Square now seeks to enforce.

University Square argues that the language of the purchase agreement is ambiguous and that its interpretation therefore presents a question of fact that precludes summary judgment on the question whether " Exception 2" was or ought to have been deleted. It submitted affidavit testimony of a real estate industry expert in support of its position, which is that by virtue of being a " signatory" to the purchase agreement First American assumed an affirmative duty to delete " Exception 2" from the title insurance policy before it was issued. That argument is unsupported by the record and untenable as a matter of law.

When construing a contract or one of its provisions, the intentions of the parties govern. First Nat. Bank of Ypsilanti v. Redford Chevrolet Co., 270 Mich. 116, 121, 258 N.W. 221, 223 (1935). The first objective is to " honor the intent of the parties, " Rasheed v. Chrysler Corp., 445 Mich. 109, 127 n.28, 517 N.W.2d 19, 29 n.28 (1994), and the prime source of that intent is the plain language of the agreement, Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41, 61, 664 N.W.2d 776, 787 (2003) (" Well-settled principles of contract interpretation require one to first look to a contract's plain language."). If the language is " clear and unambiguous, " the Court need look no further. Haywood v. Fowler, 190 Mich.App. 253, 258, 475 N.W.2d 458, 461 (1991).

" 'Where the language of the writing is not ambiguous the construction is a question of law for the court on a consideration of the entire instrument.'" In re Landwehr's Estate, 286 Mich. 698, 702, 282 N.W. 873, 874 (1938) (quoting Griffin Mfg. Co. v. Mitshkun, 233 Mich. 640, 642, 207 N.W. 814, 814 (1926)). A contract is unambiguous if it " fairly admits of but one interpretation." Allstate Ins. Co. v. Goldwater, 163 Mich.App. 646, 648-49, 415 N.W.2d 2, 4 (1987). " Where the language of a contract is clear and unambiguous, the intent of the parties will be ascertained according to its plain sense and meaning." Haywood, 190 Mich.App. at 258, 475 N.W.2d at 461; see also Dillon v. DeNooyer Chevrolet Geo, 217 Mich.App. 163, 166, 550 N.W.2d 846, 848 (1996) (" Contractual language is construed according to its plain and ordinary meaning, and technical or constrained constructions are to be avoided."). The Court should " give effect to every word, phrase, and clause in a contract and avoid an interpretation that would render any part of the contract surplusage or nugatory." Klapp v. United Ins. Grp. Agency, Inc . 468 Mich. 459, 468, 663 N.W.2d 447, 453 (2003).

The Court finds that the plain language of the contract is clear and unambiguous, and that language cannot reasonably be interpreted to impose any duty upon First American to delete the disputed exception from the policy prior to issuance.

First, the purchase and sale agreement cannot reasonably be interpreted as imposing upon First American any general obligation to perform as a party. The agreement plainly states in the recitals that it " is made by and between Sidhant Dhir . . . (herinafter 'Purchaser' or 'Buyer') and 2751-2761 Jefferson Avenue Holdings, LLC . . . ('Seller')." Third-Party Def.'s Supp. Brief [dkt. #21], Ex. B, Purchase & Sale Agreement at 1. On the page provided for the signatures of the parties, the agreement states that " Purchaser and Seller have executed this Agreement on the date set forth below." Id. at 20 (emphasis added). By contrast, on a separate page, entitled " Acknowledgement by Title Company, " the signature of First American's representative is prefaced with the statement that " Title Company has signed this Agreement for the limited purposes set forth herein." Id. at 21 (emphasis added). The plain language of the agreement enumerates the parties as " Buyer" and " Seller, " and it does not reference First American anywhere as a party. The agreement states that it was " executed" by the buyer and seller, but merely " signed" and " acknowledged" by First American. Moreover, although University Square casts First American as a " signatory" to the agreement in its briefing on the motion for reconsideration, even the third-party plaintiff evidently does not contend that First American was a party.

Second, the specific section of the agreement on which University Square relies cannot reasonably be interpreted, in the context of the agreement as a whole, as imposing any affirmative duty upon First American with respect to the issuance of the title insurance policy. University Square argues that paragraph 8.1.6 of the purchase agreement imposed a duty on First American to delete " Exception 2" from the policy upon receipt of a " sufficient" owner's affidavit. But that paragraph is part of section 8.1 of the agreement, which is headed " Seller's Deliveries, " and which provides that " Seller shall deliver . . . the following original documents, " including " [a]n 'Owner's Affidavit' . . . sufficient for Title Company to delete any exceptions for . . . matters not shown in the public records." Id. § § 8.1, 8.1.6. The agreement employs the mandatory " shall" throughout when setting forth the obligations of the parties, but section 8.1.6 is conspicuously lacking in any " shall" language relating to First American, particularly when contrasted against other sections that spell out the functions of the title company. E.g., § § 2.2.2, 8.4, 13.2. Section 8.1.6 therefore cannot be interpreted reasonably and consistently with the agreement as a whole as imposing any affirmative duty upon First American. The only reasonable interpretation of the plain language of section 8.1.6 is that it imposes a duty upon the seller to deliver certain documents. Nothing in that section obliges First American to take any action in response to those documents.

Finally, University Square's contention that the owner's affidavit must have been deemed " sufficient" by First American is belied by the record, because it is undisputed that the owner's affidavit did not address " matters not shown in the public record." See Third-Party Def.'s Supp. Brief [dkt. #21], Ex. C, Owner's Affidavit. To the extent that the affidavit was deficient or unsatisfactory to First American, University Square's recourse under section 8.1.6 of the purchase agreement is against the seller alone, for its failure to deliver a satisfactory affidavit.

B. Scope of Exception 2

University Square's assertion that " Exception 2" should not apply to bar coverage against the claims raised by GEO Finance is belied by the record and contrary to the position that the third-party plaintiff has advanced in resisting the claims raised in the original complaint. It remains the undisputed position of all the parties -- and a key premise of University Square's defense to the primary claims -- that plaintiff GEO Finance, LLC never recorded any alleged interest in the geothermal equipment located on the subject property. Coverage for any such interest therefore is barred by " Exception 2, " which expressly excludes coverage for " [e]asements, liens or encumbrances, or claims thereof, not shown by the Public Records." Third-Party Compl., Ex A, Policy Schedule B ¶ 2. University Square argues that " [i]f GEO's interests were extinguished by the foreclosure, then GEO's claim cannot be one for easement, lien, or encumbrance because GEO has no interest pursuant to the foreclosure." However, if the alleged interest is beyond the reach of " Exception 2" because it is not an " easement, lien, or encumbrance, " then it also is outside the scope of the coverage afforded under " Covered Risk 2, " on which University Square principally relies, because that provision extends coverage only against " [a]ny defect in or lien or encumbrance on the Title." Third Party Compl., Ex. A, Policy at 1.

C. Marketability of Title

University Square says that a genuine issue of fact remains as to whether it is entitled to coverage under provisions of the policy other than " Covered Risk 2." However, that argument is unsupported by the record and misconstrues the applicable law. University Square contends that affidavits attached to its supplemental briefs establish that " several prospective buyers did not purchase the Property upon learning of the lawsuit, " and that it therefore may be entitled to coverage under " Covered Risk 3, " which insures against " [u]nmarketable [t]itle." Third Party Compl., Ex. A, Policy at 1. University Square cites Madhavan v. Sucher, 105 Mich.App. 284, 306 N.W.2d 481 (1991), for the proposition that title is unmarketable if " a reasonably prudent man, familiar with the facts, would refuse to accept title in the ordinary course of business, and it is not necessary that the title actually be bad in order to render it unmarketable, " Id. at 288, 306 N.W.2d at 483. However, in making that argument, University Square abstracts one sentence from the court's opinion out of context and neglects its full holding, in which the court explained that:

Marketable title is one of such character as should assure to the vendee the quiet and peaceful enjoyment of the property, which must be free from incumbrance. Barnard v. Brown, 112 Mich. 452, 70 N.W. 1038 (1897). An incumbrance is anything which constitutes a burden upon the title, such as a right-of-way, a condition which may work a forfeiture of the estate, a right to take off timber, or a right of dower. Post v. Campau, 42 Mich. 90, 3 N.W. 272 (1879). A title may be regarded as " unmarketable" where a reasonably prudent man, familiar with the facts, would refuse to accept title in the ordinary course of business, and it is not necessary that the title actually be bad in order to render it unmarketable. Bartos v. Czerwinski, 323 Mich. 87, 34 N.W.2d 566 (1948); see also Cole v. Cardoza, 441 F.2d 1337 (6th Cir. 1971) (applying Michigan law).

Ibid. As the court's full holding makes clear, the hypothetical or actual refusal to accept title must be premised upon facts that would lead a buyer reasonably to conclude that the property was subject to " [a]n incumbrance . . . which constitutes a burden upon the title, such as a right-of-way, a condition which may work a forfeiture of the estate, a right to take off timber, or a right of dower." Ibid. The original complaint and the third-party complaint do not allege any facts sufficient to justify a belief by a reasonable buyer that the property is subject to any such encumbrance that would disturb " the quiet and peaceful enjoyment of the property." Ibid. Evidence that one or more buyers declined to complete a purchase merely because they learned of ongoing litigation involving the owner of the property does not suffice to establish a genuine issue of material fact as to whether University Square presently holds marketable title.

University Square contends that First American's representative Jessica Ladwig testified that coverage might be afforded under the marketable title provision if the geothermal equipment were deemed to be a fixture, and that this admission in itself establishes that a genuine issue of material fact remains as to the scope of coverage. However, even if the equipment ultimately is deemed to be a fixture, the question whether coverage under the policy would extend generally to a defect in title resulting from a third-party's alleged interest in a " fixture" is immaterial. For the reasons discussed above, regardless of the nature of GEO Finance's alleged interest, coverage is excluded under the plain terms of the policy. If the interest is in the nature of a fixture lien or other title defect or encumbrance, then coverage is excluded under " Exception 2" because it is undisputed that the interest never was recorded. If the interest is not in the nature of a lien or encumbrance, then there is no coverage at all, because the interest does not comprise a " defect in or lien or encumbrance on the title" subject to the terms of " Covered Risk 2, " and it also does not constitute " [a]n incumbrance . . . which constitutes a burden upon the title, " sufficient to render the title unmarketable and trigger coverage under " Covered Risk 3." University Square has not identified any other scenario under which coverage conceivably might apply. And as the Court explained in its prior opinion, " '[t]he insurer is not required to defend the insured against claims expressly excluded from coverage in the policy.'" Ginger v. Am. Title Ins. Co., 29 Mich.App. 279, 284, 185 N.W.2d 54, 56 (1970) (quoting Duval v. Aetna Casualty & Surety Company, 304 Mich. 397, 401, 8 N.W.2d 112, 114 (1943)).

III.

The third-party plaintiff has failed to show that any genuine issue of material fact remains for trial as to the claims raised in the third-party complaint, and it therefore has not established that a different outcome would result from a re-adjudication of the third-party defendant's motion to dismiss under the alternative standard of review under Federal Rule of Civil Procedure 56.

Accordingly, it is ORDERED that the third-party plaintiff's motion for reconsideration [dkt. #46] is DENIED.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.