Ford Motor Company v. Trident Barrow Management 22 LLC

Filing 42

ORDER Denying #31 Defendants' Amended Motion for Cancellation of Notice of Lis Pendens. Signed by District Judge Victoria A. Roberts. (LVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
FORD MOTOR COMPANY,
Plaintiff,
Case No. 16-14250
v.
Honorable Victoria A. Roberts
TRIDENT BARROW MANAGEMENT 22, LLC,
Defendant.
_________________________________/
ORDER DENYING DEFENDANT’S AMENDED MOTION FOR CANCELLATION OF
NOTICE OF LIS PENDENS [Doc. 31]
Ford Motor Company (“Ford”), filed a breach of contract claim against Trident
Barrow Management, LLC (“Trident”) on November 11, 2016. Ford alleges that Trident’s
refusal to execute a restrictive covenant upon Ford’s request breaches the express
terms of an agreement between the parties. On July 21, 2017, Ford filed a notice of lis
pendens, stating that the action had commenced and that it affects the real property
concerning the restrictive covenant.
Trident filed an amended motion for cancellation of the notice of lis pendens
(“Motion”). That motion is DENIED.
I.

Background
In December 2012, Ford sold Trident the majority of the acreage of the former

Wixom Assembly Plant (“Wixom Site”), where Ford assembled automobiles from 1957
through 2007. On December 21, 2012, Ford and Trident entered into an Environmental
Cooperation Agreement (“ECA”). It sets forth the obligations of Ford and Trident in

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remediating the environmental conditions of the Wixom Site. Under the ECA, Ford
agreed to complete remedial actions to ensure that the Wixom Site complied with
Michigan’s Natural Resources and Environmental Protection Act (“NREPA”).
On July 26, 2016, Ford sent Trident a letter saying that Ford had completed its
on-site remediation work. Ford asked Trident to execute a restrictive covenant that
would, inter alia, prohibit the Wixom Site from being developed for residential purposes,
and for its groundwater to be used for drinking or irrigation purposes. The letter stated
that the restrictive covenant to be signed by Trident, would need to be submitted to the
Michigan Department of Environmental Quality (“MDEQ”) as required by the NREPA.
Trident refused to execute the restrictive covenant, arguing that it was not
obligated to because Ford had first materially breached the ECA by submitting
erroneous reports to the MDEQ. Trident also argues that Ford’s remediation activities
had not been completed, meaning Trident’s obligation to execute the restrictive
covenant had not yet been triggered. This lawsuit followed.
In its Motion, Trident argues that Ford’s notice of lis pendens should be canceled
because: 1) Ford’s breach of contract suit does not affect title to real property; and 2)
the harms to Trident caused by the notice far outweigh any purported benefit to Ford.
Trident also argues that the Court should award it fees and costs it incurred in
connection with this Motion.
Ford contends that: 1) the restrictive covenant does affect title to the Wixom Site;
and 2) the notice protects the interests of the public and Ford, and does not impose
more than an existing contractual duty on Trident.

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II.

Legal Standard
The filing of a notice of lis pendens notifies prospective purchasers of real

property of a legal action concerning the property, and warns potential purchasers that
they take the property subject to any judgment rendered in the litigation. Chirco v. S. R.
Acquisitions, LLC, 2000 U.S. Dist. LEXIS 23821, *6-7 (E.D. Mich. Aug. 2, 2000) (citing
M.C.L. § 600.2701(1)). “Such a notice may be filed even if the action is brought in a
federal court.” Id. at *7 (citing M.C.L. § 600.2735(1), which “applies to suits affecting title
to real property in the federal courts”).
III.

Analysis
A. The Restrictive Covenant Affects Title To The Wixom Site
Trident argues that the Court should enter an order cancelling Ford’s notice of lis

pendens because Ford’s suit does not affect Trident’s title to the Wixom Site. Instead,
according to Trident, the case concerns whether Ford completed the environmental
remediation activities at the Wixom Site, such that Trident’s obligations to execute the
restrictive covenant ripened. Trident says its obligation to execute and file a restrictive
covenant once remediation efforts are complete, is memorialized in the ECA, which
itself is recorded and makes clear that the obligations under the ECA run with the land.
Trident says that the only impact of Ford’s notice is to prejudice Trident’s ability to sell
the land.
Ford argues that the purpose of the notice of lis pendens is to provide notice to
any potential buyer that the outcome of the lawsuit may result in limitations on the use
of the Wixom Site. Thus, argues Ford, its lis pendens notice is proper.

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The parties did not cite to any Michigan state court cases in arguing whether a
restrictive covenant affects title, and the Court did not find Michigan cases on point.
However, state courts around the country have held that disputes surrounding restrictive
covenants involve rights incident to title such that a lis pendens notice is appropriate.
For example, in an Arizona case, Tucson Estates v. Superior Court, the plaintiffs,
residents of a mobile home community, sought a court declaration of an implied
restrictive covenant that a golf course be maintained for the exclusive use of residents
of the community. Tucson Estates v. Superior Court, 151 Ariz. 600, 605 (1986). The
plaintiffs recorded a notice of lis pendens, which the defendants demanded be removed.
Id. at 602. The court noted that if declared by the court, the covenant would give
residents who owned lots in the community the right to use the golf course, “which
arises out of their ownership of such lots and would thus be a right incident to their title.”
Id. at 605. The court also noted that similarly, such a covenant would impose upon the
defendant, the owner of the golf course, “a duty to maintain the land as such, a duty
which is also incident to its title.” Id. The court held that a notice of lis pendens may be
filed when the object of a suit is to determine a right incident to title. Id.
In the Colorado case of Hammersley v. District Court of County of Routt, the
plaintiffs were owners of a lot in a residential subdivision. They filed suit against an
owner of an adjacent lot in the subdivision, seeking to enforce a restrictive covenant that
imposes certain criteria with respect to constructing improvements. Hammersley v.
District Court of County of Routt, 199 Colo. 442, 443 (1980). The plaintiffs alleged that
the residence being constructed by the defendant would detrimentally affect the view
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from their home. Id. The plaintiffs filed a notice of lis pendens, which the defendant
sought to remove. The court reasoned that the case involved “the extent of limitations
on the rights of an owner of a lot in a subdivision to construct a residence on that
property. Those rights are incidents of the owner’s title”. Id. at 445. The court also noted
that “[a]lthough the present litigation does not seek to change ownership in any way, it
does involve a determination of certain rights incident to ownership and in that sense
affects title to real property.” Id. at 445-46.
The Court finds Tuscon Estates, 151 Ariz. at 605, and Hammersley, 199 Colo. at
445, instructive.
Ford seeks specific performance and injunctive relief; it asks the Court to require
Trident to execute the restrictive covenant. This restrictive covenant would place
prohibitions on the use of the property, affecting the rights of Trident and subsequent
owners with respect to the Wixom Site. The Court finds that such rights are incident to
the owner’s title and affect title to real property. It follows that Ford’s notice of lis
pendens is appropriate.
B. There Are No Equitable Grounds On Which To Cancel The Notice Of Lis
Pendens
Trident claims that Ford’s notice places a cloud on Trident’s title, when Ford
knows that Trident is actively attempting to sell the property. This irreparable harm,
according to Trident, outweighs whatever benefit Ford or others obtain from the notice
of lis pendens. Therefore, Trident argues, the notice should be cancelled on equitable

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grounds; it says Michigan courts have given trial judges the discretion to do so if the
judge believes the benefits of the notice are far outweighed by the damage it causes.
Ford argues that the lis pendens notice protects its interest and the public’s
interest without imposing on Trident more than its contractual duty to execute the
restrictive covenant. Specifically, Ford argues that without a signed restrictive covenant
by the property owners, it cannot fulfill its obligations under the NREPA to address the
environmental conditions of the Wixom Site. Only with the notice of lis pendens,
according to Ford, can it be assured that it will obtain the restrictive covenant to fulfill its
obligation, and that the property will not be sold to a party that may contest its obligation
to sign the restrictive covenant. Ford also claims that the public has a right to know that
a subsequent owner will be required to follow restrictions on the property. Finally, Ford
argues that the lis pendens notice is not the impediment to Trident’s attempt to sell the
property; Trident has been trying to sell since December 2012, and the notice of lis
pendens was not filed until July 21, 2017.
Beyond stating its conclusion, Trident does not explain how its title has been
clouded by the lis pendens notice such that it cannot successfully find a buyer. Further,
such arguments have been rejected in other courts. The defendant in Hammersley
argued that “the notice of lis pendens will cloud his title and will impair its marketability.”
Hammersley, 199 Colo. at 446 n. 2. The court found that “[n]o unfairness to the owner
or to the subsequent purchaser is perceived in binding them both by the judgment in the
pending action.” Id. Further, the court observed that the plaintiffs, similar to what Ford
argues, had “a legitimate interest in obtaining a final resolution of the questions in
litigation” and that notice of lis pendens was necessary to protect this interest. Id.
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The Court sees no reason to find that the harms of the lis pendens notice
outweigh its benefits, and will not cancel it on equitable grounds.
IV.

Conclusion
Trident’s amended motion for cancellation of the notice of lis pendens is

DENIED. Also, the Court declines to award Trident’s fees and costs incurred in the
preparation and filing of its Motion.
IT IS ORDERED.
S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: March 20, 2018

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