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STATE OF MICHIGAN COURT OF APPEALS

CITY OF DETROIT, Plaintiff-Appellee, v MICHAEL KELLY, DETROIT LEASING COMPANY and DETROIT LEASING, INC., Defendants-Appellants, and TAXPAYER (6821 EAST FERRY), PRESTON INVESTMENTS, INC. and ROBERT W. PHILIP, Defendants.

UNPUBLISHED October 13, 2009

No. 280974 Wayne Circuit Court LC No. 07-710328-CH

Before: Murray, P.J., and Gleicher and M.J. Kelly, JJ. PER CURIAM. In this real property ownership dispute, defendants Michael Kelly, Detroit Leasing Company and Detroit Leasing, Inc. appeal as of right a circuit court order quieting title in plaintiff City of Detroit. We affirm. This action commenced when plaintiff filed a one-count complaint seeking to quiet title in its favor with respect to 6821 East Ferry Street in Detroit. The complaint alleged that plaintiff "acquired the property through tax foreclosure," specifically a circuit court judgment of tax foreclosure ultimately entered on June 29, 2005. The complaint also averred that "[d]efendants all claim an interest in 6821 E. Ferry through documents filed with the Wayne County Register of Deeds after" plaintiff had recorded with the register of deeds in April 2004 a notice of "lis pendens in connection with the tax foreclosure matter." (Emphasis in original). Plaintiff theorized that because the "lis pendens constitutes constructive notice from the time of its recording that not only is there active litigation pending that could effect [sic] the title to the property, but that any interest in the property claimed by . . . Defendants . . . will be subject to the judgment rendered in the litigation," the interests that defendants claimed through subsequently filed documents qualified as void against plaintiff's tax foreclosure judgment.

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After Kelly and the Detroit Leasing entities answered the complaint, plaintiff filed a motion for summary disposition pursuant to MCR 2.116(C)(10). Plaintiff argued that as a matter of law, "any . . . interests claimed [by defendants] via documents filed with the Register of Deeds after the date that the lis pendens was filed" were secondary or subject to the ownership interest that plaintiff obtained through the June 2005 judgment of foreclosure on 6821 East Ferry. Kelly and Detroit Leasing responded that "[a] notice of lis pendens is ineffectual against a party with an interest in property that existed prior to the notice, even if that interest was not recorded until after the notice was filed." Kelly and Detroit Leasing asserted that several undisputed facts proved that they possessed an interest in 6821 East Ferry before plaintiff filed the notice of lis pendens on April 9, 2004: (1) on September 13, 2002, Detroit Leasing obtained a tax deed for paying 1998 taxes due on 6821 East Ferry, which invested them with "absolute title" to the property pursuant to MCL 211.72, (2) in July 2004, Detroit Leasing commenced an action to quiet title under MCL 211.79a, which mandates notice to all persons or entities "with a legal interest" in the property, (3) plaintiff did not receive its interest in the property until June 2005, (4) by this time, on May 13, 2005, the circuit court had entered a judgment quieting title in 6821 East Ferry in Detroit Leasing, thus perfecting Detroit Leasing's interest in the property, and (5) Detroit Leasing recorded its quiet title judgment on July 13, 2005, while plaintiff recorded its judgment of foreclosure on May 22, 2006, giving Detroit Leasing a prior and superior interest according to MCL 565.29. Kelly and Detroit Leasing further maintained that plaintiff did not qualify as a bona fide purchaser of 6821 East Ferry because it neither paid consideration for its judgment of foreclosure nor received its interest in good faith, and, alternatively, that the terms of plaintiff's foreclosure judgment plainly contemplated that it did not affect prior or subsequent tax lien-related interests. Kelly and Detroit Leasing urged the circuit court to grant summary disposition in their favor. The circuit court held a summary disposition hearing, and initially declined to find that the language in plaintiff's foreclosure judgment had no impact on the validity of Detroit Leasing's interest. The court explained, "I just don't read it to have the effect that [defense counsel] assert[s]." Concerning Detroit Leasing's position that it had the priority interest because it recorded its quiet title judgment before plaintiff recorded its foreclosure judgment, the circuit court accepted plaintiff's argument, Plaintiff's counsel: Well, technically, the operative date is the date the complaint for foreclosure is filed. We go by the les pendence [sic] date just because we felt it's more equitable. It's a registered deed to something that everybody has access to. It's a public record. The Court: That's enough. Okay. That's all. Agreed for [plaintiff's counsel]. The court lastly rejected that Kelly's payment of taxes in 2004 and 2006, after plaintiff commenced its foreclosure action, affected its analysis regarding the priority of plaintiff's interest. On September 7, 2007, the circuit court entered an order quieting title to 6821 East Ferry in plaintiff.

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Kelly and Detroit Leasing maintain on appeal that the circuit court erroneously quieted title in plaintiff. We review de novo the circuit court's summary disposition ruling, the equitable ruling quieting title, and any inherent legal questions of statutory interpretation.1 Richards v Tibaldi, 272 Mich App 522, 528; 726 NW2d 770 (2006). A summary disposition motion premised on MCR 2.116(C)(10) tests the factual support for a claim. Lewis v LeGrow, 258 Mich App 175, 192; 670 NW2d 675 (2003). In reviewing a (C)(10) motion, this Court considers the pleadings and any affidavits, depositions, and other documentary evidence submitted by the parties in the light most favorable to the nonmoving party to determine whether any genuine issue of material fact exists for trial, or whether the moving party was entitled to judgment as a matter of law. Michigan Ed Employees Mut Ins Co v Turow, 242 Mich App 112, 114-115; 617 NW2d 725 (2000). When Detroit Leasing obtained its tax deed to 6821 East Ferry in September 2002, after paying in 2001 the overdue 1998 property taxes levied on the property, MCL 211.72 described the nature of Detroit Leasing's interest, in relevant part as follows: Upon presentation of the purchaser's certificate of sale prescribed by section 71 to the state treasurer or his or her authorized representative after the expiration of the time provided by law for the redemption of lands sold for the nonpayment of taxes, the state treasurer shall cause a tax deed of conveyance of the land described in the certificate of sale to be executed and delivered to the purchaser, or his or her heirs or assigns, unless the sale was redeemed or annulled as provided by law. . . . The tax deed may be recorded in the office of the register of deeds of the proper county in the same manner and with like effect as other deeds duly witnessed, acknowledged, and certified. The tax deeds convey an absolute title to the land sold, and constitute conclusive evidence of title, in fee, in the grantee, subject, however, to all taxes assessed and levied on the land subsequent to the taxes for which the land was bid off. This title is also subject to

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"Well-established principles guide this Court's statutory construction efforts. We begin our analysis by consulting the specific statutory language at issue." Bloomfield Charter Twp, 253 Mich App 1, 10; 654 NW2d 610 (2002). When faced with questions of statutory interpretation, our obligation is to discern and give effect to the Legislature's intent as expressed in the words of the statute. We give the words of a statue their plain and ordinary meaning, looking outside the statute to ascertain the Legislature's intent only if the statutory language is ambiguous. Where the language is unambiguous, we presume that the Legislature intended the meaning clearly expressed--no further judicial construction is required or permitted, and the statute must be enforced as written. [Id. (internal quotation omitted).] When interpreting tax statutes, only "[w]hen there is doubt . . . [must] tax laws . . . be construed in favor of the taxpayer." Ameritech Publishing, Inc v Dep't of Treasury, 281 Mich App 132, 136; 761 NW2d 470 (2008) (internal quotation omitted).

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unpaid special assessments and unpaid installments of special assessments. . . . [Emphasis added.]2 The clear and unambiguous language of MCL 211.72 reflects that Detroit Leasing's tax deed vested it with "absolute title" to 6821 East Ferry, "subject, however, to all taxes assessed and levied on the land subsequent to the taxes for which the land was bid off." Kelly and Detroit Leasing do not contest plaintiff's assertion that neither paid the taxes levied on 6821 East Ferry during tax years 1999, 2000, or 2001, which with penalties, interest and administration fees exceeded $17,000. Several Michigan statutory provisions describe the potential impact of a real property owner's neglect to pay property taxes. "For taxes levied after December 31, 1998, property returned for delinquent taxes is subject to forfeiture, foreclosure, and sale as provided in sections 78 to 79a." MCL 211.60a(3). Section 78 authorizes the state or county treasurers to foreclose on forfeited property, and defines "forfeited" or "forfeiture" as "a foreclosing governmental unit may seek a judgment of foreclosure under section 78k if the property is not redeemed as provided under this act, but does not acquire a right to possession or any other interest in the property." MCL 211.78(6)(b).3 A local governmental unit, like plaintiff, also may collect property taxes and enforce tax liens on entering an agreement with the county. MCL 211.78(5).4 In MCL 211.78a, the Legislature described the circumstances in which forfeiture, foreclosure and sale of tax delinquent properties may occur. Section 78a contemplates, in pertinent part, as follows: (1) For taxes levied after December 31, 1998, all property returned for delinquent taxes, and upon which taxes, interest, penalties, and fees remain unpaid after the property is returned as delinquent to the county treasurers of this state under this act, is subject to forfeiture, foreclosure, and sale for the enforcement and collection of the delinquent taxes as provided in section 78, this section, and sections 78b to 79a. As used in section 78, this section, and sections 78b to 79a, "taxes" includes interest, penalties, and fees imposed before the taxes become delinquent and unpaid special assessments or other assessments that are due and payable up to and including the date of the foreclosure hearing under section 78k. (2) On March 1 in each year, taxes levied in the immediately preceding year that remain unpaid shall be returned as delinquent for collection. . . . Except as otherwise provided in section 79 for certified abandoned property, property delinquent for taxes levied in the second year preceding the forfeiture under section 78g or in a prior year to which this section applies shall be forfeited

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The Legislature repealed MCL 211.72 effective December 31, 2003. 1999 PA 123. These definitions currently appear in MCL 211.78(7)(b). Currently MCL 211.78(6).

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to the county treasurer for the total of the unpaid taxes, interest, penalties, and fees for those years as provided under section 78g. Pursuant to the referenced

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