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STATE OF MICHIGAN COURT OF APPEALS

E. T. MACKENZIE CO., Plaintiff/Counter-Defendant/CrossPlaintiff/Cross-DefendantAppellant/Cross-Appellee, v RBS CONSTRUCTION, INC. a/k/a RBS COMPANIES, INC. and KBB CONSTRUCTION, INC., Defendants, and LANSING CLASSIC LIVING, L.L.C., Defendant/CounterDefendant/Cross-Defendant, and INDEPENDENT BANK WEST MICHIGAN, Defendant/CounterPlaintiff/Counter-Defendant/CrossPlaintiff/Third-Party PlaintiffAppellee/Cross-Appellant, v KEBS, INC., SPARTAN IRRIGATION, INC., AMERI-CONSTRUCTION & CONCRETE, INC., TREES, INC., and MPC CASH-WAY LUMBER, CO., Third-Party Defendants/Third-Party Cross-Plaintiffs/Third-Party Counter-PlaintiffsAppellants/Cross-Appellees, and

UNPUBLISHED December 13, 2011

No. 297406 Clinton Circuit Court LC No. 06-10088-CH

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G & B SUPPLY CO., HARRIS HOMES CARPENTRY, INC., MCGUIRE MECHANICAL, INC., THOMAS H. MALLORY, PARAGON CONSTRUCTION CO., LTD., VANS EXCAVATING, LTD., KENNETH F. DANTER, WILLIAM E. HOLLAND, III, CHRISTENSEN'S PLANT CENTER, INC., GUNNER PLUMBING, INC., STREAMLINE ENTERPRISES, INC., TODD FISHER a/k/a TF & KC PAINTING, INC., TOTAL OUTDOOR SERVICES, INC., MCPHERSON BUILDERS, INC., and E.W. KITCHENS, INC., Third-Party Defendants, and THOMPSON-MCCULLY ASPHALT PAVING, L.L.C. a/k/a MICHIGAN PAVING & MATERIALS CO. d/b/a SPARTAN ASPHALT PAVING CO., Third-Party Defendant/Third-Party Counter-Plaintiff/Third-Party Cross-Plaintiff-Appellee.

Before: WILDER, P.J., and TALBOT and SERVITTO, JJ. PER CURIAM. Various subcontractors, including E. T. MacKenzie Company, KEBS, Inc., Spartan Irrigation, Inc., Ameri-Construction & Concrete, Inc., Trees, Inc., and MPC Cashway Lumber Company, appeal a series of orders resulting in a judgment in favor of Independent Bank West Michigan regarding the priority of Independent Bank's mortgage over the subcontractors' construction liens and adjustment of the amounts of the subcontractors liens in this case brought pursuant to the Construction Lien Act (CLA).1 We affirm. I. Background Lansing Classic Living, L.L.C. purchased property to develop a condominium project. The purchase price was obtained in part through a $990,000 loan made by Independent Bank that was secured by a mortgage recorded on October 28, 2004. The parties concur that the first

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MCL 570.1101, et seq.

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physical improvement to the property occurred on January 24, 2005. In March 2005, Independent Bank approved an increase of the loan in the amount of $4,000,000, which included the original $990,000 and $3.01 million of "new" money. Construction on the project was halted due to the failure of the general contractor to remit timely payments, resulting in the subcontractors filing claims of lien against the property for varying amounts due in accordance with their contracts. The litigation initiated in this matter primarily focused on determining the priority of Independent Bank's mortgage and the subcontractors' liens. The subcontractors argued that Independent Bank's 2005 note and mortgage extinguished the 2004 mortgage and that, because the 2005 mortgage and note were executed after the first physical improvement to the property was rendered, Independent Bank's mortgage and note were lower in priority than the subcontractors' liens. Relying on the language of the 2004 mortgage, the trial court determined that the $4,000,000 loan in 2005 constituted a future advance contemplated by the 2004 mortgage and that the entire $4,000,000 was secured by the 2004 mortgage. The subcontractors also challenged whether Independent Bank had complied with the requirements of the CLA for the various draws to receive priority status.2 While not admitting to any failure to abide by the provisions of the CLA, Independent Bank argued that even with the elimination of all the disputed draws there remained over $2 million in uncontested draws that would receive priority over the subcontractors' liens, in addition to the initial $990,000 loan. The trial court concluded that partial summary disposition was appropriate "on the basis of undisputed waivers of lien," and ordered that the 2004 mortgage had "priority in the amounts of $990,000 and $2,650,481.77 over all construction liens and notices of interest recorded against the property." In turn, Independent Bank sought to reduce the amounts of the subcontractors' liens claiming that certain liens included inappropriate amounts for interest, attorney fees, lost profits, and retainage. The trial court rejected the subcontractors' claims for prefiling interest, attorney fees, lost profits, and retainage amounts, making proportional reductions in the various liens, after finding that such costs were not contemplated within the CLA and the absence of any provision for such damages in the parties' respective contracts. The trial court ruled that Independent Bank had priority in the amounts of $990,000 and $2,650,481.77 over all construction liens and notices of interest. The property was eventually sold at a sheriff's sale, with Independent Bank the successful bidder at $1,760,000. The trial court entered a final order

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MCL 570.1101, et seq.

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discharging all construction liens on the property and terminating any alleged rights to foreclose the discharged liens on March 16, 2010. II. Lien Priority A mortgage constitutes "mere security for the debt or liability secured by it, the debt or liability is the principal and the mortgage but an incident or accessory."3 As a result, "payment, release, or anything which extinguishes the debt, extinguishes the mortgage."4 "[T]he necessary result is that the mortgage instrument, without any debt, liability or obligation secured by it, can have no present legal effect as a mortgage or an incumbrance upon the land. It is but a shadow without a substance, an incident without a principle; and it can make no difference in the result whether there has once been a debt or liability which has been satisfied, or whether the debt or liability to be secured has not yet been created. . . ."5 The holder of a mortgage has a statutory obligation to discharge it upon payment or other satisfaction.6 While the parties do not disagree on these basic legal precepts, they dispute whether Independent Bank's 2004 note was paid and the 2004 mortgage was extinguished. Specifically, the subcontractors assert that the execution of the 2005 note and mortgage automatically extinguished the 2004 mortgage. In response, Independent Bank argues that the unambiguous language of the 2004 mortgage and case law supports the trial court's conclusion that the 2004 mortgage was not discharged and should receive priority. "In interpreting a contract, [this Court's] obligation is to determine the intent of the contracting parties."7 "[A]n unambiguous contractual provision is reflective of the parties' intent as a matter of law."8 "[C]ourts must . . . 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

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Ginsberg v Capitol City Wrecking Co, 300 Mich 712, 717; 2 NW2d 892 (1942). Id. Id. at 717-718, quoting Ladue v Detroit & Milwaukee R Co, 13 Mich 380, 397 (1865). MCL 565.41(1).

Quality Prod & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375; 666 NW2d 251 (2003).
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Id.

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nugatory."9 "[I]f the language of a contract is clear and unambiguous, its construction is a question of law for the court."10 The 2004 mortgage provided in relevant part: FUTURE ADVANCES. Specifically, without limitation, this Mortgage secures, in addition to the amounts specified in the Note, all future amounts Lender in its discretion may loan to Grantor, together with all interest thereon. *** Indebtedness. The word "Indebtedness" means all principal, interest, and other amounts, costs and expenses payable under the Note or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge Grantor's obligations or expenses incurred by Lender to enforce Grantor's obligations under this Mortgage, together with interest on such amounts as provided in this Mortgage. Specifically, without limitation, Indebtedness includes the future advances set forth in the Future Advances provision of this Mortgage, together with all interest thereon. *** Note. The word "Note" means the promissory note dated October 27, 2004, in the original principal amount of $990,000.00 from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancing of, consolidations of, and substitutions for the promissory note or agreement. . . . *** Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. Because this language is clear and unambiguous, there can be no reasonable dispute that the $4,000,000 loan in March 2005 constituted a future amount provided by Independent Bank under the 2004 mortgage agreement.

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Klapp v United Ins Group Agency, Inc, 468 Mich 459, 468; 663 NW2d 447 (2003) (citation omitted). Michigan Nat'l Bank v Laskowski, 228 Mich App 710, 714; 580 NW2d 8 (1998).

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Michigan law has long permitted mortgages to cover future advances.11 Further, "Michigan case law has held that acceptance of a renewal note is not regarded as payment of a preexisting note or obligation, in the absence of a novation or express agreement to the contrary."12 Under the unambiguous terms of the 2004 mortgage, the subsequent $4,000,000 loan was a future amount loaned. Because the note that represented the underlying obligations of the 2004 mortgage included all renewals and consolidations, an underlying debt remained and the 2004 mortgage was not discharged by the 2005 loan. The subcontractors fail to cite case law in support of their contention that the existence of a second mortgage that is secured by the same debt as the first mortgage necessarily results in the discharge of the first mortgage. "[T]his Court will not search for authority to support a party's position, and the failure to cite authority in support of an issue results in its being deemed abandoned on appeal."13 We further reject this argument as this Court has previously held that multiple mortgages secured by the same debt were not only proper, but could be enforced individually.14 Specifically, this Court found that separate foreclosures on individual mortgages were permissible because "[e]ach mortgage instrument constituted a separate and distinct contract, capable of independent enforcement."15 This Court also held, "`[T]wo or more mortgages or separate properties to secure the same debt may be foreclosed successively until the debt is satisfied.'"16 Because there is no prohibition on having multiple mortgages secured by the same debt, the existence of the 2005 mortgage did not automatically serve to discharge the 2004 mortgage. Based on the unambiguous language of the 2004 mortgage, the trial court properly concluded that the mortgage was not discharged by the subsequent loan of additional monies in 2005 and that the 2004 mortgage had priority over the subcontractors' construction liens. This finding renders moot the additional contentions raised by the subcontractors regarding the priority of their construction liens under the CLA17 and Independent Bank's assertion that MacKenzie's lien should be rendered void because of bad faith in its filing. III. Factual Findings Although the subcontractors argue that the trial court improperly made findings of fact in determining that the execution of the 2005 note and mortgage were "one of the future advances

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See Riess v Old Kent Bank, 253 Mich 557, 563; 235 NW 252 (1931).

See Thorp Fin Corp of Wisc v Ken Hodgins & Sons, 73 Mich App 428, 431; 251 NW2d 614 (1977). Flint City Council v Michigan, 253 Mich App 378, 393 n 2; 655 NW2d 604 (2002). Mich Nat'l Bank v Martin, 19 Mich App 458; 172 NW2d 920 (1969). Id. at 462. Id., quoting 59 CJS, Mortgages,

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