Many people are familiar with libel and slander, which are two causes of action meant to allow individuals to protect their reputation. All owners of real property should also know that there is a comparable type of claim that one can bring to protect a person’s interest in the ability to sell his or her real property. That claim is called slander of title.
“In Michigan, slander of title claims have both a common-law and statutory basis.” B&B Inv. Group v Gitler, 229 Mich App 1, 8; 581 NW2d 17 (1998). A common law slander of title claim requires that a plaintiff “show falsity, malice and special damages.” Id. A statutory slander of title claim is brought under MCL 565.108, which provides in full:
No person shall use the privilege of filing notices hereunder for the purpose of slandering the title to land, and in any action brought for the purpose of quieting title to land, if the court shall find that any person has filed a claim for that reason only, he shall award the plaintiff all the costs of such action, including such attorney fees as the court may allow to the plaintiff, and in addition, shall decree that the defendant asserting such claim shall pay to plaintiff all damages that plaintiff may have sustained as a result of such notice of claim having been so filed for record.
Thus, “[t]he same three elements are required in slander of title actions brought under MCL 559.108” as are required under common law slander of title actions. B & B Inv Group, 229 Mich App at 8.
The Michigan Court of Appeals has held that “the filing of an invalid lien may be a falsehood, even if the matter contained in the lien is correct.” Sullivan v Thomas Org, PC, 88 Mich App 77, 83; 276 NW2d 522 (1979). And the Michigan Supreme Court has held that malice could be either express or implied, that is, that it may be inferred from any wrongful act done intentionally without just cause or excuse or even from statements made without probable cause.” Glieberman v Fine, 248 Mich 8, 226 NW 669 (1929). Further, “[i]n Michigan, special damages have been recognized to include litigation costs, impairment of vendibility, and loss of rent or interest.” B & B Inv Group, 229 Mich App at 9, citations omitted.
Of these three elements (falsity, malice, and special damages), it is typically malice that is the most difficult to prove. Recently, the Michigan Court of Appeals, in an unpublished decision, clarified how a plaintiff may allege malice to survive a motion for summary disposition under MCR 2.116(I)(2) (opposing party entitled to judgement).
In Ramos v Bibi, Inc., unpublished per curiam opinion of the Court of Appeals, issued July 23, 2020 (Docket No. 347751), the Court examined, in relevant part, Ramos’s claim that the trial court erred in dismissing his slander of title against Defendant Bibi, Inc., who was doing business as Black Jack Asphalt. Ramos entered into a land contract with co-Defendants, Lynn and Janine Wilkinson, but the Wilkinsons’ bank dishonored their down-payment (a check) because it was drawn on a closed account. Ramos sought possession of the property, which was eventually granted.
But, while the Wilkinsons still were in possession of the property, they entered into a contract with Black Jack Asphalt for it to install a driveway on the property. After the driveway was completed, the Wilkinson’s paid Black Jack Asphalt with a check which was later dishonored because it too was drawn on a closed account.
The Wilkinsons were evicted from the property on September 25, 2017, but almost a month later, on October 16, 2017, Black Jack Asphalt filed a construction lien on the property for the amount it was owed under the contract to install the new driveway. Ramos’s attorney sent Black Jack Asphalt two letters, one in February 2018 and the second in April 2018, requesting that Black Jack Asphalt remove the construction lien, arguing that the Wilkinsons did not have an interest in the property when the lien was filed. Black Jack Asphalt, however, refused to discharge the lien.
Ramos filed a slander of title claim against Black Jack Asphalt. In relevant part, Black Jack Asphalt moved for summary disposition under MCR 2.1116(I)(2) (opposing party entitled to judgment) arguing that Ramos had insufficiently plead the elements of slander of title. The trial court granted Black Jack Asphalt’s motion for summary disposition, and Ramos appealed.
The Court of Appeals explained that the trial court erred in dismissing Ramos’s slander of title claim. The trial court had believed that Ramos had failed to allege actual malice. The Court of Appeals disagreed. It stated that because Black Jack Asphalt filed the lien after the Wilkinsons no longer had an interest in the property, and because Black Jack Asphalt refused to remove the invalid lien after it was notified that the lien was invalid, Ramos had sufficiently plead allegations to establish a prima facie case. The Court of Appeals therefore reversed the trial court’s order granting Black Jack Asphalt’s motion for summary disposition, and remanded the case for further proceedings (i.e., for trial on the slander of title claim).
Property owners who have had a lien filed on their property should take a lesson from the Ramos case: malice can be showed by refusing to discharge a lien on a property after being informed that it is invalid. Further, even if a property owner cannot show malice, and therefore is unable to bring a slander of title claim, he or she may still be able to bring a quiet title action to resolve the dispute and ensure that the property owner retains possession of his or her property and has marketable title that can later be transferred. Quiet title actions are also used in cases when a lienholder has forgotten to remove a lien on property, even though the debt has been satisfied. In Michigan, quiet title actions are authorized by statute, which provides:
MCL 600.2932 Action to determine interests in land
(1) Interest of plaintiff. Any person, whether he is in possession of the land in question or not, who claims any right in, title to, equitable title to, interest in, or right to possession of land, may bring an action in the circuit courts against any other person who claims or might claim an interest inconsistent with the interest claimed by the plaintiff, whether the defendant is in possession of the land or not.
(2) Mortgagees, eligibility. No action may be maintained under subsection (1) by a mortgagee, his assigns, or representatives for recovery of the mortgaged premises, until the title to the mortgaged premises has become absolute, or by a person for the recovery of possession of premises, which were sold on land contracted, to whom relief is available under subsection (1) of section 5634.
(3) Establishment of title, relief afforded. If the plaintiff established his title to the lands, the defendant shall be ordered to release to the plaintiff all claims thereto. In an appropriate case the court may issue a writ of possession or restitution to the sheriff or other proper officer of any county in this state in which the premises recovered are situated.
(4) Tenancy in common. Any tenant or tenants in common who recovers any undivided interest in lands in an action under subsection (1) against a person or persons who may be in possession thereof, but who does not show in the trial of such action that he or they have any interest therein or title thereto, may take possession of the entire premises subject to all of the rights and interest of the other tenant or tenants in common therein.
(5) Actions equitable in nature. Actions under this section are equitable in nature.
Therefore property owners who believe their ownership rights have been encumbered by a lien should be aware that they may have several options to ensure the lien is appropriately discharged, which will protect their interest in and the ability to sell their real property.