Shenandoah Ridge Condominium Association v Bodary

• Docket No. 364972

• Opinion Published: January 13, 2025 (Patel, P.J., Murray, J. and Yates, JJ.)

• Livingston County Circuit Court

Holding: The Court of Appeals concluded that failure to release a notice of lis pendens following dismissal of claims upon which alleged interest was premised warranted a finding of malice, even if the initial filing was not malicious or false.

Facts: The case was originally brought by the Plaintiff Shenandoah Ridge Condominium Association to enforce liens filed to collect outstanding association fees. Two of the homeowner defendants filed claims against three other homeowners, alleging that because the homes of the third-party defendants had not been built within 10  years of the recording of the master deed, their units reverted to common elements and filed notices of lis pendens against their property. The third-party defendants filed counterclaims of slander of title based on the filing of the lis pendens notices.

The trial court granted summary disposition of the reversion claims brought by the third-party plaintiffs, finding that the third-party plaintiffs did not have standing as individual homeowners to assert a claim of reversion under MCL 559.167(3) and further, MCL 559.167(3) did not apply to site condominiums. Following that ruling, the case remained open due to the pendency of other claims between the plaintiff and other parties. Despite summary disposition of their reversion claim, which formed the basis for the lis pendens, the third-party plaintiffs did not release the liens.

Seventeen months later, the third-party defendants sought summary disposition in their favor on the slander of title claims based on the third-party plaintiffs’ failure to release the liens. The third-party plaintiffs argued that the lis pendens were not recorded for a malicious purpose and instead reflected their honest belief that they had an interest in the property. The third-party plaintiffs further argued that the issue of malicious intent should be evaluated only at the time of recording and not at any other time in the course of the litigation.

The trial court disagreed, finding that the third-party plaintiffs’ claimed interest was “tenuous” even before it was dismissed, however upon dismissal of their reversion claim, the liens should have been discharged. Further, the failure to act expediently to remove the liens was done with malice and an intent to continue to injure the third-party defendants. The liens were ordered removed within seven days and a hearing was scheduled to determine damages.

At hearing, the third-party defendants presented evidence that but-for the liens, they would have been able to refinance their mortgages at lower interest rates. The trial court rejected the argument from the third-party plaintiffs that the claimed damages were speculative because the liens may not have been not the only thing which impaired refinance.

On review, the Court of Appeals agreed with the trial court that the failure to release the liens once their reversion claim was dismissed, even if the lien was initially filed properly in the first instance. The Court of Appeals rejected the claim that malice could only be established by looking at the time of the recording, affirming several unpublished opinions which affirmed slander of title based on wrongful continuations of liens.

Key Appellate Rulings

Continuation of a lien post-dismissal of legal claim underlying claimed interest may give rise to inference of malice, even if initial recording was not malicious.

Moreover, the Court of Appeals found that the third-party plaintiffs waived any argument that they could have a reasonable belief post-dismissal because they could appeal the summary disposition award. At argument before the trial court, counsel for third-party plaintiffs focused on whether a finding of malice could be based on conduct after the initial recorded, claiming that it could not, and admitted that once the reversion claims were dismissed, they had no colorable claim of interest. Because trial counsel did not raise the issue of whether the potential for appellate reversal of the trial court’s conclusion regarding the reversion claim could warrant a finding that there was no malice by their continued assertion of the lis pendens, the third-party plaintiffs could not do so on appeal.

Finally, as to the damages, the Court of Appeals declined to review the trial court’s award, finding that on appeal, the only argument raised by the third-party plaintiffs was that the third-party defendants failed to mitigate their damages by affirmatively seeking discharge of the liens sooner. This argument was not raised before the trial court until the third-party plaintiffs sought reconsideration. The Court of Appeals found that the trial court properly declined to consider the argument on reconsideration and accordingly, the argument was unpreserved for appellate review.

Failure to raise mitigation of damages argument until reconsideration may result in a waiver of appellate review.