Wayne
Circuit Court LC No. 16-015714-AV
Before: Beckering, P.J., and Cavanagh and Ronayne Krause, JJ.
RONAYNE KRAUSE, J.
Plaintiff
Detroit Club Holdings, LLC (DCH) and intervenors Charles
Soule and Jeremy Langenderfer appeal by leave granted the
trial court's order reversing a denial by the district
court of a motion for relief from judgment filed by defendant
Jay Edward Kloian (Kloian), and vacating the district
court's default judgment previously entered against
defendant. This matter arises out of summary proceedings for
possession of a condominium originally owned by defendant,
purchased by DCH at a foreclosure sale, and subsequently
re-sold to intervenors. The foreclosure is not at issue in
this appeal. Rather, defendant contends that DCH did not
provide him with adequate notice of its claim for possession.
We affirm in part, vacate in part, and remand for further
proceedings.
I.
BACKGROUND
On
April 27, 2010, defendant purchased condominium unit 20 in
the Belle Point Estates Condominium by covenant deed. The
deed was recorded, and it showed defendant's home address
in Ann Arbor, Michigan. Defendant then sold the unit to
non-party Aisha Crawford on land contract. Crawford failed to
pay property taxes or condominium association dues, as
required by the land contract. In October of 2014, the
condominium association sent a notice to Kloian at his Ann
Arbor address of a lien for unpaid condominium assessments.
The association also recorded a notice of the lien, which
also listed Kloian's Ann Arbor address. Kloian received
the notice, but took no action because he relied on
Crawford's assurances that she would pay any outstanding
dues. Crawford continued to evade payment. Kloian contends
that on March 30, 2016, to avoid tax foreclosure, he paid $8,
200.31 on the 2014 delinquent real estate taxes to the Wayne
County Register of Deeds. Kloian further contends that after
pursuing foreclosure against Crawford, she agreed to vacate
the condominium by May 1, 2016, and quit-claim her interest
back to Kloian.
However,
in the meantime, on March 16, 2016, the Association posted a
Notice of a Foreclosure Sale on the condominium and published
the notice in the Detroit Legal News. The notice stated an
amount owed of $4, 950.00 and a Sheriff's sale date of
April 21, 2016. No notice was sent to Kloian's Ann Arbor
address. Unbeknownst to Kloian, the Sheriff's sale was
held as scheduled, and DCH purchased the condominium unit for
$45, 249.25. That same day, DCH posted a Notice to Inspect at
the condominium unit and sent a copy of the notice by
certified mail, addressed to the condominium unit. Although
Kloian protests the failure to notify him of the sale, he
does not challenge the legality of the foreclosure or the
foreclosure sale in this action.
DCH
contends that on April 27, 2016, it was unable to gain access
to the condominium unit when its representative attempted to
conduct an inspection. The inspector deemed the property
vacant and in damaged condition-a broken window, a damaged
garage door, and overgrown grass. Relying on MCL 600.3238(6),
DCH then initiated summary proceedings for possession of the
property, asserting that Kloian unreasonably refused to allow
DCH access to the condominium unit for an inspection and that
damage to the property had occurred. On April 28, 2016, DCH
mailed a notice of an action for possession to defendant,
addressed to him at the condominium unit's address. DCH
was aware that the U.S. Postmaster had posted a vacancy
notice on the property at that time, indicating that the
property was vacant. In May of 2016, DCH recorded a
"Sheriff's Deed on Association Dues/Fees Sale"
pertaining to the condominium with the Wayne County Register
of Deeds, detailing the foreclosure sale of the condominium
to plaintiff. DCH searched for Kloian's address on
LexisNexis and found the address of the condominium to be
Kloian's last known address. DCH did not make any other
efforts to discover where Kloian might be found. DCH then
mailed a notice to Kloian of Demand for Possession/Health
Hazard, again only addressed to him at the condominium unit.
On May
20, 2016, DCH filed a complaint in district court against
Kloian, alleging that Kloian remained in possession of the
condominium, and asserting that DCH had a right to enter into
possession of the condominium pursuant to MCL 600.3238 and
MCL 600.5714(1)(d) because Kloian unreasonably refused an
inspection by DCH and the property was in damaged condition.
The district court addressed a summons to Kloian "and
all other [o]ccupants" of the condominium, informing
Kloian of DCH's complaint to evict him from the
condominium. The summons and the complaint listed
Kloian's address as that of the condominium unit. On June
9, 2016, the district court entered a default judgment of
possession against Kloian, ordering that DCH had a right to
possession and that Kloian was to be evicted. DCH then
recorded an "affidavit of termination of redemption
rights" with the Wayne County Register of Deeds. On June
22, 2016, DCH conveyed the property to intervenors for $115,
000.00.
Kloian
contends that he first learned of the proceedings the next
month, when he sent a locksmith to change the locks on the
condominium unit. Kloian apparently sent the locksmith
because he had a prospective buyer for the property, who had
previously tried to view the property but had been unable to
gain access. According to Kloian, the locksmith was ordered
to leave the property by a person who claimed to have
purchased the property. On July 28, 2016, Kloian sent a
request to DCH for a calculation of the redemption amount for
the property and expressing his intent to redeem the
property. DCH did not respond to that request.
On
September 1, 2016, Kloian filed a motion for relief from
judgment pursuant to MCR 2.612(B), contending, in relevant
part, that he had never received notice of any actions
against the property, and DCH had constructive notice of his
correct address in Ann Arbor because that address had been
listed on the 2010 deed. The district court denied
Kloian's motion for relief from judgment, finding that
DCH provided adequate notice to Kloian. The district court
also held that under MCR 2.612(B), personal jurisdiction over
Kloian was unnecessary because this was an in rem
proceeding. Furthermore, the district court stated that there
were innocent third-party purchasers, and granting
Kloian's motion would be prejudicial to those purchasers.
Kloian appealed to the circuit court.
The
circuit court held a hearing at which it rendered a somewhat
piecemeal bench ruling. The circuit court held that the
notice requirements set forth in MCL 600.3238, which
addresses the right to inspect property after a mortgage
foreclosure sale by advertisement, were inapplicable because
no mortgage was involved; however, the circuit court also
opined that DCH failed to comply with the notice requirements
in that statute. The trial court noted that "everybody
knew" that Kloian did not live at the condominium, yet
DCH continued to mail notices to the vacant property and made
no further efforts to discover Kloian's whereabouts. The
circuit court also found that Kloian had standing to appeal
despite having failed to tender a redemption amount pursuant
to MCL 559.208(2), which pertains to the foreclosure of
condominium liens, because any such tender would have been
futile. The circuit court ultimately concluded that MCL
600.3240 and MCL 559.208, when read in conjunction, indicated
that Kloian's period to exercise his right of redemption
would have been "six months." The trial court
declined to address whether intervenors were subsequent bona
fide purchasers without notice.
On
April 3, 2018, this Court entered an order granting
appellants' application for leave to appeal. Detroit
Club Holdings, LLC v Edward, unpublished order of the
Court of Appeals, entered April 3, 2018 (Docket No. 340874).
II.
STANDARD OF REVIEW
"Whether
a party has standing is a question of law that this Court
reviews de novo." In re Gerald L Pollack Trust,
309 Mich.App. 125, 154; 867 N.W.2d 884 (2015). "Issues
of statutory construction are questions of law," which
this Court reviews de novo. Corwin v DaimlerChrysler Ins
Co, 296 Mich.App. 242, 253; 819 N.W.2d 68 (2012).
"Court rules are interpreted using the same principles
that govern statutory interpretation." Pellegrino v
AMPCO Sys Parking, 485 Mich. 1134, 1135 n 1; 789 N.W.2d
777 (2010). "We review for an abuse of discretion a
circuit court's ultimate decision to grant or deny relief
from a judgment." Rose v Rose, 289 Mich.App.
45, 49; 795 N.W.2d 611 (2010). We review for clear error a
trial court's findings of fact. Herald Co, Inc v
Eastern Mich. Univ Bd of Regents, 475 Mich. 463,
470-472; 719 N.W.2d 19 (2006). Under the clear error
standard, this Court defers to the trial court unless
definitely and firmly convinced that ...