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One Court of Justice Blog

November 29, 2016

COA reinforces publication requirement for slander of title claim and holds that deed restrictions recorded outside the chain of title cannot impact a property interest

In Petersen Financial LLC v. Twin Creeks, Nos. 329019 and 329622, the Court of Appeals affirmed the trial court orders in favor of defendants on plaintiff’s claim for slander of title and tortious interference with business expectancy (No 329019); and in favor of plaintiff regarding quiet title, specifically, that certain deed restrictions do not apply to their property (No. 329622).  
 
Regarding the claim for slander of title, the Court of Appeals affirmed the trial court's decision that in order to prevail on a common-law slander of title claim; a plaintiff must prove “that the defendant maliciously published false statements that disparaged a plaintiff’s right in property, causing special damages.”  Fed Nat Mortg Ass’n v Lagoons Forest Condo Ass’n, 305 Mich App 258, 270; 852 NW2d 217 (2014). The Court held the dispositive issue was the publication requirement and publication to plaintiff’s agent is the equivalent of publication to plaintiff itself and cannot satisfy the publication requirement. The plaintiff failed to prove that defendants made comments or other communications regarding the deed restrictions to anyone other than plaintiff and plaintiff’s real estate agents. “Publication to an agent of the plaintiff who is acting at plaintiff’s behest and on his behalf is tantamount to a publication to the plaintiff himself, and as such does not fulfill the publication requirement.”  Delval v PPG Indus, Inc., 590 NE2d 1078, 1081 (Ind App, 1992). Since Plaintiff cannot satisfy the publication requirement, its slander of title claim fails.
 
The Court rejected the plaintiff’s arguments under MCL 565.957 that the real estate agent has an obligation to disclose the information to a third party, such as a potential buyer.  The Court held this would affirm the decision in Delval since not only would the real estate agent have a duty to disclose, so would the seller. 
 
Regarding quiet title, specifically that certain deed restrictions do not apply to their property, the Court of Appeals affirmed the trial court’s decision in favor of plaintiff. The court concluded that deed restrictions for these property lots do not apply if they do not encumber the lot as a restrictive covenant since the majority of the lot was conveyed prior to the Deed Restrictions being recorded or executed.  Furthermore, the remainder of the lot was conveyed before the Deed Restrictions were recorded.  Thirdly, the Deed Restrictions were executed and recorded by a party that never held an interest in plaintiff’s lot, let alone at the time it executed or recorded the Deed Restrictions. Based on these factors, the Deed Restrictions were clearly outside the lot’s chain of title, and a document recorded outside the chain of title cannot affect the interest of a person within the chain of title.  Bristol v Braidwood, 28 Mich 191, 193 (1873).
 
Defendants were unable to establish the common owner requirement because plaintiff’s lot was sold before other lots were sold subject to the deed restrictions.  Defendants attempt to avoid this problem by arguing that another parties’ reliance and acceptance of the subsequent deed restrictions make them part of a group of “ common owners” fails.  Therefore, defendants failed to make an argument that deed restrictions filed outside the chain of title are enforceable. The Court of Appeals affirmed the trial court’s decision and rejected defendants’ argument that, even if not effective as deed restrictions, those restrictions qualify as a reciprocal negative easement.
 

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