Introduction
On March 17, 2020, the Michigan Court of Appeals approved for publication its December 19, 2019 opinion in New Products Corporation v Harbor Shores BHBT Land Development, LLC, __ Mich App __; __ NW2d __ (2019) (Docket No. 344211), holding that a property owner abutting a Jack Nicklaus Signature championship golf course lost its rights to a disputed parcel of land when it did not object during construction of the golf course’s 18th hole in the disputed area. The Michigan Court of Appeals determined the golf course’s potential loss of status as a Jack Nicklaus Signature championship golf course outweighed the property owner’s rights in the disputed parcel in light of the fact the property owner did not object to the construction until the golf course was completed and open to the public.
Background
The disputed parcel’s ownership history is murky as it borders the Paw Paw River, which was relocated in the 1950s and resulted in a relocation of the parcel. To make matters worse, the Paw Paw River also served as the boundary between the city of Benton Harbor (“Benton Harbor”) and Benton Charter Township (“Benton Township”) and the parcel’s relocation resulted in confusion between Benton Harbor and Benton Township as to which had jurisdiction to assess the parcel’s property taxes.
In 1955, New Products Corporation (“New Products”) acquired the parcel and paid property taxes that were assessed by Benton Harbor; however, at the same time, Benton Township was assessing property taxes on the same parcel to an individual named Frank Hoffman, and the State of Michigan eventually “acquired” the parcel due to Frank Hoffman’s failure to pay those taxes. In 1973, the State of Michigan deeded the property back to Frank Hoffman, and by 2007, Harbor Shores Golf Course, LLC (“Harbor Shores”) “acquired” a portion of the parcel. This set the stage for two conflicting claims to the parcel: New Products on one side, who actually owned the disputed parcel, and Harbor Shores on the other, who had a chain of title claiming ownership of the parcel dating back to at least 1971.
New Products became aware that Harbor Shores intended to build part of a golf course on the parcel and, beginning in 2008, New Products and Harbor Shores engaged in discussions as to who actually owned the parcel. In July 2008, Harbor Shores reiterated it owned the parcel and invited further discussion of the matter with New Products. While New Products later attended a meeting with Harbor Shores in September 2008, New Products did not further press its claims that it owned the parcel.
Beginning in late September 2008, Harbor Shores began constructing the golf course and surrounding residential community, placing the 18th hole on the parcel. The golf course opened to the public in 2010 and was designated a Jack Nicklaus Signature championship golf course, allowing for it to host the Senior PGA Championship Tournament in even-numbered years through 2024. From late September 2008 through September 2011, New Products did not further object to Harbor Shores’ construction or file a lawsuit to determine who owned the parcel. After New Products finally filed a lawsuit in September 2011, the trial court, in pertinent part, ultimately ruled that New Products could no longer assert its rights over the parcel against Harbor Shores because it waited until after the golf course opened to do so, and the Michigan Court of Appeals affirmed this decision.
Analysis
New Products sought to quiet title to the disputed parcel, and Harbor Shores defended its claim to the parcel, in pertinent part, based on the following equitable defenses: laches, unclean hands and estoppel. As explained by the Michigan Court of Appeals:
“Estoppel by laches is the failure to do something which should be done under the circumstances or the failure to claim or enforce a right at the proper time.” […] “A party guilty of laches is estopped from asserting a right it could have and should have asserted earlier.” […]
The unclean-hands doctrine is “a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the [opposing party].” […]
Equitable estoppel occurs when “(1) a party by representation, admissions, or silence, intentionally or negligently induces another party to believe facts; (2) the other party justifiably relies and acts on this belief; and (3) the other party will be prejudiced if the first party is permitted to deny the existence of the facts.” […] In the context of property rights, “estoppel may be invoked as an equitable defense where the plaintiff has observed the defendant dealing with his property in a manner inconsistent with his rights and makes no objection, while the defendant changes his position in reliance on the plaintiff’s silence.” (citations omitted).
The Michigan Court of Appeals held New Products could no longer assert rights over the disputed parcel against Harbor Shores under all three equitable defenses based on the following facts:
- New Products knew Harbor Shores intended to construct the 18th hole on the parcel by March 2008.
- While New Products initially asserted it owned the parcel, Harbor Shores made clear to New Products by at least September 2008 that Harbor Shores did not recognize New Products’ ownership claim.
- Harbor Shores began construction on the parcel in September 2008 and New Products did not raise any objections, even when 1,200 truckloads brought in 34,000 yards of dirt.
- In 2008, New Products and Harbor Shores were in communications regarding who owned the parcel yet New Products stopped objecting to Harbor Shores’ claims, even when Harbor Shores began construction. Accordingly, Harbor Shores could reasonably assume New Products no longer claimed ownership of the parcel based on its silence throughout construction.
- New Products did not file a complaint or seek an injunction against Harbor Shores during the golf course’s construction. Instead, New Products filed a lawsuit in September 2011 only after construction was complete and the golf course opened to the public.
- Harbor Shores would face substantial economic consequences if New Products could now assert its rights over the parcel. Harbor Shores would be forced to relocate the 18th hole of the golf course but it had already fully developed the golf course and surrounding residential community, leaving no space for a relocation of the 18th hole. The only possible solution would be to shorten the 18th hole from a par-4 to a par-3 hole; however, this would threaten the golf course’s designation as a Jack Nicklaus Signature championship golf course and, as a result, its ability to host the Senior PGA Championship Tournament.
- If New Products could now assert its rights over the parcel, Harbor Shores’ potential economic consequences would be so severe and permanent that no monetary payment from New Products could be an effective remedy.
Considering all the above, the Michigan Court of Appeals affirmed the trial court’s opinion that New Products could no longer assert its rights to the parcel against Harbor Shores and force a removal or relocation of the 18th hole because New Products failed to protect its rights promptly.
Summary
New Products Corporation v Harbor Shores BHBT Land Development, LLC is a cautionary tale for owners in a property dispute with their neighbors: Delaying in responding to your neighbor’s actions in the disputed property may result in losing a right to assert ownership of the property against your neighbor in the future, even if you previously objected. New Products initially objected to Harbor Shores’ ownership claim to the disputed parcel; however, New Products failed to continue objecting and promptly take appropriate legal action when Harbor Shores moved beyond just claiming ownership to taking more aggressive action and beginning construction within the parcel. Owners in a property dispute with their neighbors should consult with counsel knowledgeable in real property and real estate law in order to take prompt, appropriate action and protect your property rights from lapsing due to silence or delay.
While not dispositive of the case, New Products Corporation v Harbor Shores BHBT Land Development, LLC also sheds some light on the 2018 amendment to the Marketable Record Title Act (the “MRTA”), explained in further detail here, and which is still in flux, as explained here. As explained earlier, the property dispute in this case arose because the parcel was taxed by both Benton Charter and Benton Township, with an alleged tax foreclosure of the parcel arising out of Benton Township and eventually resulting in Harbor Shores’ ownership claim.
The MRTA, MCL 565.101 et seq., states “[a]ny person … that has an unbroken chain of title of record to any interest in land for … 40 years… is at the end of the applicable period considered to have a marketable record title to that interest….” MCL 565.101(1). The trial court and the Michigan Court of Appeals held that the August 6, 1971 tax deed purporting to convey the disputed parcel from Frank Hoffman to the State of Michigan created an interest in the property in the State, which began a 40-year chain of unbroken record title as it was eventually conveyed down to Harbor Shores (New Products had owned the disputed property since 1955 so there were no competing conveyances during this 40-year period). As a result, Harbor Shores obtained marketable record title in the disputed property by August 6, 2011, just one month before New Products filed its complaint seeking title to the property.
However, in a footnote in its opinion, the Michigan Court of Appeals considered which party would hold marketable record title to the property if the 2018 amendment to the MRTA applied in this case. The 2018 amendment to the MRTA added the following Subsection 2:
For purposes of this section, except as to mineral interests, a conveyance or other title transaction in the chain of title purports to divest an interest in the property only if it creates the divestment or if it specifically refers by liber and page or other county-assigned unique identifying number to a previously recorded conveyance or other title transaction that created the divestment.
The Michigan Court of Appeals opined that if Subsection 2 applied in this case, “[New Products] would prevail because none of the title transactions [i.e., conveyances from the tax deed to the State of Michigan down to Harbor Shores] created [New Product’s] divestment in the disputed parcel or referred by liber and page to a transaction that created a divestment.” Accordingly, had the chain of title that ultimately ended with Harbor Shores began after March 1979, then New Products, not Harbor Shores, would have had marketable record title to the disputed property (though it still would have lost its right to assert its interest against Harbor Shores due to its delay in bringing the case). Accordingly, this case also highlights the need for owners who are in a property dispute to consult with counsel knowledgeable in real property and real estate law in order to ascertain which version of the MRTA applies to the property in dispute and which party then holds marketable record title to the property.
Kayleigh B. Long is an attorney with Hirzel Law, PLC and focuses her practice in the areas of appellate law, community association law and civil litigation. Ms. Long received her Bachelor of Arts degree in International Studies from Indiana University. Prior to attending law school, Ms. Long joined Teach for America, teaching kindergarten in Harper Woods, Michigan and southeast Washington, D.C., and received a Master of Arts in Teaching from Oakland University. Ms. Long then obtained her Juris Doctor degree from Indiana University Robert H. McKinney School of Law, where she graduated in the top 5 of her class and served as the Senior Executive Editor on the Indiana Law Review. Her law review note was selected for publication in the Indiana Law Review, and she recently had an article published in the Denver Law Review. She can be reached at (248) 478-1800 or klong@hirzellaw.com.