Court Opinion

ID: 7798502
Source: CourtListenerOpinion
Date Created: 2022-08-08 00:07:51.455608+00
Date Added: 2024-06-11T16:28:49.582987
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                         STATE OF MICHIGAN

                          COURT OF APPEALS

RICHARD F. NADEAU and M. MADONNA                                  UNPUBLISHED
NADEAU,                                                           July 28, 2022

              Plaintiffs-Appellants,

v                                                                 No. 357876
                                                                  Wayne Circuit Court
VILLAGE GENERAL STORE, LLC,                                       LC No. 19-000753-CB

              Defendant/Third-Party Plaintiff-
              Appellee,

and

ABDELHAKEEM A. FAKHOURY, also known as
HAKIM FAKHOURY,

              Defendant-Appellee,

and

WAYNE COUNTY,

              Third-Party Defendant.

Before: M. J. KELLY, P.J., and MURRAY and BORRELLO, JJ.

PER CURIAM.

        In this breach-of-contract action to recover the outstanding balance of a land contract,
plaintiffs Richard F. Nadeau and M. Madonna Nadeau appeal by right the trial court’s order
granting summary disposition in favor of defendants, Village General Store, LLC (VGS) and

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Abdelhakeem A. Fakhoury, also known as Hakim Fakhoury.1 For the reasons set forth in this
opinion, we affirm.

                                        I. BACKGROUND

        Plaintiffs sold a parcel of real estate to defendant VGS on land contract. Fakhoury signed
a personal guarantee with respect to the performance by VGS of its obligations under the land
contract. Pursuant to the land contract, VGS, as purchaser, agreed to “purchase the land” and pay
plaintiffs, as sellers, the agreed upon sales price and interest. Plaintiffs agreed to sell and convey
the land to VGS. The land contract provided that the purchaser agreed to, among other things,
“pay all taxes and special assessments hereafter levied on the land before any penalty for non-
payment attaches thereto . . . .” The land contract also provided that the seller and purchaser
mutually agreed that “if default is made by Purchaser in the payment of any tax or special
assessment . . . as above provided, Seller may pay such tax, [or] special assessment . . . and any
amount so paid shall be a further lien on the land payable by Purchaser to Seller forthwith with
interest at 8% per annum.”

        Plaintiffs and defendants each appear to contend that the opposing party breached the land
contract for various reasons. However, it is undisputed that the property taxes on the subject
property were not paid in full at some point and that the property was forfeited to Wayne County
in tax foreclosure proceedings and subsequently conveyed to the City of Dearborn. Neither
plaintiffs, VGS, nor Fakhoury claim to currently hold title to the property.

       Plaintiffs brought this action alleging breach of contract and that Fakhoury individually
breached his obligations as guarantor. In their complaint, plaintiffs explicitly sought to recover
the outstanding unpaid balance on the land contract, including the entirety of the alleged
outstanding principal and interest payments. The trial court granted summary disposition in favor
of defendants, reasoning that plaintiffs did not have a right to recover the unpaid balance of the
purchase price under the land contract because plaintiffs could not tender title for the property to
defendants in return. This appeal followed.

                                   II. STANDARD OF REVIEW

        This Court reviews a decision on a motion for summary disposition de novo. Blackhawk
Dev Corp v Village of Dexter, 473 Mich 33, 40; 700 NW2d 364 (2005). Although the trial court
cited both MCR 2.116(C)(8) and (C)(10) in its written opinion and order, it is evident from the
trial court’s language referring to a lack of genuine issues of material fact that its decision relied
on (C)(10).

         Summary disposition under MCR 2.116(C)(10) is proper if, viewing the record evidence
in the light most favorable to the party opposing the motion, “the affidavits or other documentary
evidence show that there is no genuine issue in respect to any material fact and that the moving
party is entitled to judgment as a matter of law.” Bergen v Baker, 264 Mich App 376, 381; 691
NW2d 770 (2004). “A genuine issue of material fact exists when the record, giving the benefit of

1
    Third-party defendant Wayne County is not a party to this appeal.

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reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might
differ.” West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003).

      We review questions of law, including issues of contract interpretation, de novo. Johnson
v QFD, Inc, 292 Mich App 359, 364; 807 NW2d 719 (2011).

                                           III. ANALYSIS

       Plaintiffs argue on appeal that the trial court erred by ruling that because plaintiffs could
not convey title to the subject property, plaintiffs were not entitled to recover the purchase price
under the land contract from defendants.

        The term “land contract” is commonly used in Michigan as particularly referring to
        “agreements for the sale of an interest in real estate in which the purchase price is
        to be paid in installments (other than an earnest money deposit and a lump-sum
        payment at closing) and no promissory note or mortgage is involved between the
        seller and the buyer.” A land contract is therefore an executory contract in which
        legal title remains in the seller/vendor until the buyer/vendee performs all the
        obligations of the contract while equitable title passes to the buyer/vendee upon
        proper execution of the contract. [Zurcher v Herveat, 238 Mich App 267, 291; 605
        NW2d 329 (1999) (citation omitted).]

         Additionally, our Supreme Court has held “that under a land contract, although the vendor
retains legal title until the contractual obligations have been fulfilled, the vendee is given equitable
title, and that equitable title is a present interest in realty that may be sold, devised, or encumbered.”
Graves v American Acceptance Mtg Corp, 469 Mich 608, 614; 677 NW2d 829 (2004). “At law a
contract for the purchase of land gives the vendee no interest in the land; but the rule is otherwise
in equity, which considers the vendor, as to the land, a trustee for the purchaser, and the vendee,
as to the money, a trustee for the seller. In equity the land belongs to the vendee, and may be sold,
devised, or incumbered by him, and on his death will descend to his heirs.” Id. at 615 (quotation
marks and citations omitted).

        Here, there is no question of fact that the property at issue was forfeited in tax foreclosure
and that neither plaintiffs nor defendants currently have title to the property. In their complaint,
plaintiffs pleaded this action as one seeking the land contract’s unpaid balance.

        Almost a hundred years ago, our Supreme Court held: “tender of a deed is necessary before
one may sue on a land contract to recover the unpaid purchase price claimed to be due thereunder
….” McColl v Wardowski, 280 Mich 374, 376; 273 NW 736 (1937). Because plaintiffs did not
and cannot tender a deed to the subject property, plaintiffs are not entitled to the unpaid purchase
price on the land contract. Therefore, the trial court did not err by granting summary disposition
in favor of defendants.

        Plaintiffs’ various arguments attempt to demonstrate that defendants were responsible for
the property being forfeited in tax foreclosure proceedings do not impact the application of the rule
from McColl cited above and are therefore irrelevant to the narrow issue currently before this
Court. Plaintiffs argue that they were able to convey marketable title by warranty deed at the time
the parties executed the land contract. Further they allege the fact that title to the subject property

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now resides in the City of Dearborn following tax foreclosure proceedings is attributable to solely
to defendants’ failures. As such, their contention is that plaintiffs are still able to tender a
“warranty deed” as contemplated by the terms of the land contract. In support of this argument,
plaintiffs quote the following language from the land contract stating that plaintiffs, as sellers,
agreed to

       execute and deliver to Purchaser or his assigns, upon payment in full of all sums
       owing hereon, less the amount then owing on any unpaid mortgage or mortgages,
       and the surrender of the duplicate of this contract, a good and sufficient warranty
       deed conveying title to the land, subject to abovementioned restrictions and
       easements and to any then unpaid mortgage or mortgages, but free from all other
       encumbrances, except such as may be herein set forth or shall have accrued or
       attached since the date hereof through the acts or omissions of persons other than
       Seller or his assigns.

        However, the forfeiture of the subject property in tax foreclosure proceedings, with the
resulting loss of title, clearly exceeds the bounds of what could fairly be understood to be an
encumbrance. See Darr v First Fed S&L Ass’n of Detroit, 426 Mich 11, 20; 393 NW2d 152 (1986)
(explaining that the term “encumbrance” has been defined to include any right or interest in the
land constituting a burden upon the title “to the diminution of the value of the land, but consistent
with the passage of the fee by the conveyance”) (quotation marks and citation omitted).

      Accordingly, we conclude that the trial court did not err in its ruling dismissing plaintiff’s
complaint.

        Defendants having prevailed are entitled to costs. MCR 7.219.

       Affirmed.

                                                              /s/ Michael J. Kelly
                                                              /s/ Christopher M. Murray
                                                              /s/ Stephen L. Borrello

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