Opinion
364296
06-27-2024
CHURCH AND CHURCH, INC., doing business as CHURCH'S LUMBER YARDS, Plaintiff-Appellant/Cross-Appellee, v. SUNSET HOMES, LLC, and PAUL ESPOSITO, Defendants/Cross-Defendants- Appellees, and CHEMICAL BANK, also known as HUNTINGTON BANK, PINAKIN PATEL, and BELA PATEL, Defendants/Cross-Plaintiffs- Appellees, and ATA NATIONAL TITLE GROUP and GRECO TITLE AGENCY, LLC, Defendants-Appellees/Cross- Appellants.
UNPUBLISHED
Macomb Circuit Court LC No. 2020-004610-CH
Before: MALDONADO, P.J., and PATEL and N. P. HOOD, JJ.
PER CURIAM.
Plaintiff, Church and Church, Inc., doing business as Church's Lumber Yards (Church), sued to recover the cost of materials it supplied to Sunset Homes, LLC (Sunset) and its principal, Paul Esposito, for Sunset's residential construction projects where Sunset failed to pay Church. Church also sued ATA National Title Group (ATA) and Greco Title Agency, LLC (Greco), the title agencies involved with the residential construction projects, seeking to recover payment for the materials and supplies. As part of the same case, Church also sued to foreclose on a single construction lien on residential property owned by defendants Pinakin Patel and Bela Patel (the Patels).
This appeal involves three parts. First, Church challenges the trial court's August 3, 2022 opinion and order granting summary disposition in favor of ATA and Greco pursuant to MCR 2.116(C)(10) (no genuine issue of material fact), and thereby dismissing Church's claims for fraudulent misrepresentation, silent fraud, and civil conspiracy. Second, Church challenges the trial court's September 30, 2022 opinion and order denying its motion for summary disposition and granting summary disposition in favor of the Patels pursuant to MCR 2.116(C)(10) on Church's construction-lien claim. Third, and finally, ATA and Greco cross-appeal, challenging the trial court's failure to grant their request for sanctions.
We affirm in part and remand. We affirm the trial court's decision granting summary disposition in favor of ATA and Greco because Church failed to establish a fraudulent misrepresentation supporting its fraudulent-misrepresentation claim; it failed to establish a legal or equitable duty supporting its silent-fraud claim; and it failed to establish a viable underlying tort supporting its civil-conspiracy claim. We affirm the trial court's decision in favor of the Patels because it correctly concluded that Church's lien did not attach to the Patels' lot because the Patels filed an affidavit consistent with MCL 570.1118a(1). But we remand on the cross-appeal for the trial court consider in the first instance ATA and Greco's request for sanctions.
I. BACKGROUND
This case arises out of Church's attempts to collect payment for supplies it furnished on a construction project. Church furnished lumber and other materials to Sunset for the construction of multiple residences in Macomb County, Michigan. Sunset was the builder or contractor. Church was the supplier, furnishing building materials to Sunset between 2016 and 2019.
ATA and Greco relate to this case because they were involved with the payment. ATA was the title agency, and Greco was a related title agency. Residential new home construction involves a construction lender disbursing loan proceeds to the builder as the work continues. Typically, a builder (in this case Sunset) would submit a request to draw loan proceeds as the work is gradually completed. The title agency (ATA) would receive sworn statements and lien waivers and distribute loan proceeds from lenders and borrowers once the lender permits the release of funds. The builder is then supposed to pay its subcontractors and suppliers, like Church. Here, the parties appear to agree that Sunset did not pay Church. This is the substance of this case: Church's allegations that it was not paid for the materials, which were valued at more than $1.2 million.
Church's suit did not largely distinguish ATA from Greco except to allege joint ownership. Except to acknowledge that Terry Skawski, a critical witness, was an employee of Greco, the distinction of ATA and Greco is not important for the purposes of this appeal.
Church also recorded a construction lien against Lot 87, owned by the Patels, in the amount of $76,559.22, which it sought to foreclose in this suit. The Patels averred in their homeowners' affidavit that they entered into a contract with Sunset for improvements to their residential lot and had paid Sunset $446,620 to date in accordance with the contract. They also submitted documentary evidence detailing the disbursements, including sworn statements, a copy of a check, and payment authorizations from their lender that reflected some of the disbursements.
In December 2020, Church filed its initial complaint alleging that ATA and Greco, as title agents for Sunset, were liable under theories of fraudulent misrepresentation, innocent misrepresentation, silent fraud, breach of fiduciary duty, and civil conspiracy. Specifically, Church claimed that its president, David Kohl, and its vice president, Kevin Ches, both spoke personally with Terry Skawski, an employee of Greco, and advised him that Sunset had not paid Church for the materials it furnished and asked that any closing fund disbursements be paid directly to Church.
Broadly, ATA and Greco argued that, as title agents, they did not owe any duty to Church, a supplier, and therefore, the claims should be dismissed. They asserted that their liability was limited to the terms of the governing title insurance policy, and they otherwise had no obligation regarding Church's financial interests. Specifically, Skawski denied making any affirmative statements to Kohl or Ches regarding the disposition of funds, and further denied that ATA and Greco otherwise owed any duty to Church. Skawski shared his understanding that Kohl and Sunset's principal, Esposito, had reached a "gentlemen's agreement" regarding the payment of Church by Sunset.
In an affidavit, Church's vice president, Ches, averred that he had a conversation with Skawski in February 2018 in which he advised Skawski that Church was not receiving payments from Sunset and instructed Skawski to ensure that payments were made directly to Church, and that he sent a follow-up e-mail to confirm this conversation. Ches further attested that it was his "belief and understanding that Skawski was aware of Church's nonpayment, and would ensure that, going forward, Church's should be communicated with directly." Likewise, Church's president, Kohl, averred in an affidavit that he told Skawski in 2018 that Church was not being paid and directed Greco to provide future payments directly to Church, and that it was his "belief and understanding that Skawski was aware of Church's nonpayment, and would ensure that, going forward, Church's should be communicated with directly." In his affidavit, Kohl also stated that if Skawski told him that Greco would not issue payments directly to Church, Church would not have continued to furnish materials to Sunset. Neither affidavit indicated that Skawski actually made an affirmative representation regarding any intention to pay Church directly.
During his deposition, Kohl testified that during a conversation with Esposito, Esposito promised to make sure that Church was paid, and Kohl explained that Church had decided not to enforce its lien rights. When asked if Skawski from Greco was part of those conversations, Kohl testified that "[Skawski] wasn't part of that," but that officers of Church had discussed with Skawski that Church had not been paid for the materials it provided to Sunset. Kohl said he went to Skawski's office and spoke to him personally, and they talked about how Sunset was "closing houses" and allowing the purchasers to move in, and "we don't want that to happen." Kohl also detailed the rest of his conversation with Skawski as follows:
We want to get paid, get notified of those closings. And if we need to send you a waiver, conditional waiver, whatever it is, we will. And [Skawski] said, well, you know how [Esposito] works, some such thing, and that was the end of it.
When specifically asked, "So during that meeting, Skawski didn't make any promises to you, is that fair?," Kohl responded, "No, he didn't make any promises." At that time, Sunset owed Church $500,000. Counsel again asked Kohl, "No one from the title company ever promised you that [Skawski] would make payment to you, right?" Kohl responded, "No." Kohl was then asked, "So again with respect to . . . Greco Title and [Skawski], what promises, if any, did they make to you concerning properties on which they were acting as title agent where Sunset was the builder?" Kohl responded: "None. I wish they would have."
While Kohl shared his belief that Greco had an obligation and responsibility to notify Church when a Sunset closing was about to take place, particularly once Skawski received the email from Ches on February 23, 2018, Kohl repeatedly conceded that Skawski did not promise or represent that Greco would tender payments directly to Church.
Before the close of discovery, ATA and Greco moved for summary disposition on Church's claims. The trial court denied the motion without prejudice and allowed Church to amend its complaint, which it did. Following a hearing in August 2021, the trial court dismissed Church's claims for innocent misrepresentation and breach of fiduciary duty. The dismissal of those claims is not at issue in this appeal.
After additional discovery, ATA and Greco again moved for summary disposition, this time under MCR 2.116(C)(10). In substance, they argued that the evidence did not show that ATA or Greco intentionally lied to Church about the ability of Sunset or Esposito to pay for Church's supplies, or whether Sunset or Esposito would obtain financing to pay for the materials. ATA contended that the evidence did not support the existence of a legal duty owed to Church because agents for title insurers do not owe a legal duty to the supplier of building materials. ATA and Greco both claimed that the evidence did not support a conclusion that they made any promises to Church.
Church argued there was a question of fact regarding whether ATA made a misrepresentation that could support a claim of fraudulent misrepresentation. Specifically, Church asserted that there was evidence of conversations in which it advised ATA and Greco that it was not going to be paid, or requested that payments be made directly to it, specifically instructing Greco's representative, Skawski, that it would be providing waivers directly, rather than through Sunset. Church, therefore, expected that Skawski would ensure that payments would go directly to Church. Church further argued that ATA's "intentional inaction" amounted to silent fraud, given that it was clearly aware that Sunset had failed to pay Church out of funds that had been issued for the express purpose of paying Church.
The trial court granted ATA and Greco's motions for summary disposition, dismissing the remaining claims against them. Regarding Church's fraudulent-misrepresentation claim, the trial court found that Church did not present evidence to support its assertions that ATA made specific representations that it would make direct payments to Church instead of Sunset. The trial court therefore ruled that any request Church made for ATA to make direct payments, and any resultant belief that ATA would in fact do so, did not give rise to a fraudulent-misrepresentation claim. Regarding silent fraud, the trial court concluded that Church could not overcome the fact that it cited no authority and advanced no argument to support its contention that ATA had an equitable duty to say or do something once it was aware that Church was not being paid directly. The trial court determined that Church failed to establish the existence of any duty owed to it by ATA, or that its actions were in any way false or misleading, or made with an intent to deceive. Because Church could not establish the underlying tort claims, its claim for civil conspiracy was also factually deficient under MCR 2.116(C)(10) and should be dismissed.
The trial court also dismissed Church's construction-lien claim against the Patels, who submitted a homeowners' affidavit pursuant to MCL 570.1118a asserting that they had paid their contractor, Sunset, for the improvements to their residential structure. The trial court observed that the unambiguous language of MCL 570.1118a allowed a party to avoid a lien attaching to their property by filing an affidavit indicating that the owner has in fact paid the contractor for the improvement according to the terms of the parties' contract, indicating the amount of the payments and attaching copies of the contract, any change orders, and evidence of payment. The trial court noted that the Patels had filed an affidavit of payment, which stated that they had entered into a contract with Sunset to construct their condominium unit, that they had paid Sunset $446,620, and that they included copies of a check from the Patels, as well as payment authorizations allowing their lender, Huntington Bank, to pay their builder.
ATA and Greco also requested sanctions and costs under MCR 1.109(E) and MCR 2.625(A), arguing that "[t]here is nothing unique about this case that would warrant counsel's effort to create new law in this area to impose a duty upon [ATA and Greco] in favor of Church's[.]" Following a hearing in July 2022, the trial court took the matter under advisement for issuance of a written opinion, but neglected to rule on the matter.
This appeal followed. On appeal, Church challenges the trial court's dismissal of its claims against ATA and Greco for fraudulent misrepresentation, silent fraud, and civil conspiracy pursuant to MCR 2.116(C)(10). It also challenges the trial court's dismissal of its construction-lien claim against the Patels pursuant to MCR 2.116(C)(10). On cross-appeal, ATA and Greco argue that the trial court erred by failing to award them sanctions on the ground that Church 's claims against them were frivolous.
II. CHURCH'S CLAIMS AGAINST ATA AND GRECO
Church argues that the trial court erred by granting ATA and Greco's motion for summary disposition and dismissing its claims for fraudulent misrepresentation, silent fraud, and civil conspiracy. We disagree.
The trial court dismissed Church's claims for breach of fiduciary duty and innocent misrepresentation in a prior order granting ATA and Greco's motion for summary disposition of those claims. Church does not challenge the dismissal of those claims in this appeal.
This Court reviews a trial court's decision on a motion for summary disposition de novo. Maiden v Rozwood, 461 Mich. 109, 118; 597 N.W.2d 817 (1999). The trial court dismissed Church's claims pursuant to MCR 2.116(C)(10). In El-Khalil v Oakwood Healthcare, Inc, 504 Mich. 152, 160; 934 N.W.2d 665 (2019), our Supreme Court explained:
A motion under MCR 2.116(C)(10) . . . tests the factual sufficiency of a claim. Johnson v VanderKooi, 502 Mich. 751, 761; 918 N.W.2d 785 (2018). When considering such a motion, a trial court must consider all evidence submitted by the parties in the light most favorable to the party opposing the motion. Id. A motion under MCR 2.116(C)(10) may only be granted when there is no genuine issue of material fact. Lowrey v LMPS & LMPJ, Inc, 500 Mich. 1, 5; 890 N.W.2d 344 (2016). "A genuine issue of material fact exists when the record leaves open an issue upon which reasonable minds might differ." Johnson, 502 Mich. at 761 (quotation marks, citation, and brackets omitted).
A. FRAUDULENT MISREPRESENTATION
First, the trial court did not err when it granted summary disposition on Church's fraudulent-misrepresentation claim because there was no genuine issue of material fact regarding ATA or Greco making a material misrepresentation. In Titan Ins Co v Hyten, 491 Mich. 547, 555; 817 N.W.2d 562 (2012), our Supreme Court identified the elements of a fraudulent- misrepresentation claim as follows:
(1) That [the] defendant made a material representation; (2) that it was false; (3) that when he made it he knew that it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with the intention that it should be acted upon by [the] plaintiff; (5) that [the] plaintiff acted in reliance upon it; and (6) that he thereby suffered injury.
At issue here is the first element, that being whether Skawski, an employee of Greco, made a material representation to Church's officers. The trial court correctly disposed of Church's fraudulent-misrepresentation claim because there was no genuine issue regarding a material representation.
In their affidavits, Ches and Kohl, respectively Church's vice president and president, both averred that it was their "belief and understanding" that Skawski was aware that Sunset was not paying Church. Although Ches's affidavit repeatedly expressed his belief that Skawski was aware that Sunset was not paying Church, and indicates that Ches requested that future payments be made directly to Church, it does not allege that Skawski, on behalf of Greco or ATA, made a material representation regarding any intention to pay Church directly. Kohl averred that if Skawski told him that Greco would not issue payments directly to Church, Church would not have continued to furnish materials to Sunset. But like Ches's affidavit, Kohl's affidavit does not indicate that Skawski actually made an affirmative representation regarding any intention to pay Church directly.
Likewise, in his deposition, Kohl testified about conversations he had with both Esposito- Sunset's president-and Skawski, about Sunset not paying Church, but he did not testify that Skawski made a misrepresentation to him or anyone else at Church. Specifically, when asked if anyone from the title agency promised that it would make payments to Church, Kohl responded, "No." Kohl also acknowledged that Greco and Skawski did not make any promises concerning properties on which they were acting as title agent and where Sunset was the builder. Rather, he testified, "I wish they would have." Further, while Kohl shared his belief that Greco had an obligation to notify Church when a Sunset closing was about to take place, particularly once Skawski received the e-mail from Ches on February 23, 2018, Kohl repeatedly conceded that Skawski did not promise or represent that Greco would tender payments directly to Church.
In short, Church failed to establish a genuine issue of material fact regarding the first element of a claim for fraudulent misrepresentation, that being the requirement of a material representation. Therefore, the trial court did not err by dismissing this claim under MCR 2.116(C)(10).
B. SILENT FRAUD
Next, Church argues the trial court erred by granting summary disposition against its silent-fraud claim. Again, we disagree. Church failed to establish that it made specific inquiries that triggered a duty to disclose on the part of ATA and Greco. It also failed to establish, separate from its inquiries, that the duty otherwise existed.
Silent fraud is also known as fraudulent concealment. Mercurio v Huntington Nat'l Bank, __Mich App__, __; __N.W.2d__ (2023) (Docket No. 361855); slip op at 9. It requires a plaintiff to "set forth a more complex set of proofs." M &D, Inc v WB McConkey, 231 Mich.App. 22, 28; 585 N.W.2d 33 (1998). In contrast to a fraudulent-misrepresentation claim, a plaintiff can establish a silent-fraud claim by showing "suppression of material facts, along with a legal or equitable duty to disclose those facts." Mercurio, __Mich App at __; slip op at 9, citing M &D, Inc, 231 Mich.App. at 35-36. To prevail on a claim of silent fraud, a plaintiff must be able to show that the defendant "knew of a material fact but concealed or suppressed the truth through false or misleading statements or actions with the intent to deceive." Mercurio, __Mich App at__; slip op at 9. The mere nondisclosure of information itself will not give rise to silent fraud, instead the circumstances must give rise to a legal duty of disclosure. Hord v Environmental Research Institute of Mich, 463 Mich. 399, 412; 617 N.W.2d 543 (2000). An essential element of a claim for silent fraud is the existence of a legal or equitable duty of disclosure, which is a legal issue for a court to decide. Mercurio, __Mich App at __; slip op at 9-10.
Recently, in Mercurio v Huntington Nat'l Bank, this Court recognized that a legal duty to disclose will generally arise in situations where a plaintiff makes a specific inquiry and the defendant gives incomplete responses that are truthful, but omit material information. See __Mich App at__; slip op at 10, citing Hord, 463 Mich. at 412. This Court stated that "[t]he duty to disclose generally applies in the context of fiduciary or comparable relationships, but there is no duty to disclose in an ordinary contract setting except when a party is responding to a specific inquiry." Mercurio, __Mich App at__; slip op at 10. In Mercurio, the plaintiff, an investor in a business, who had personally guaranteed some of the business's loans, alleged that the defendant bank and its vice president fraudulently obtained a personal guaranty and investment. Id. at; slip op at 1. The plaintiff alleged that she and the defendant bank vice president had discussed the companies that plaintiff was considering giving a personal guaranty, and the vice president spoke highly of these companies. Id. at __; slip op at 2. The trial court granted summary disposition under MCR 2.116(C)(8), concluding that this allegation alone did not establish that the defendant had a legal or equitable duty of disclosure to the plaintiff to support a claim of silent fraud. Id. at __; slip op at 4. This Court noted that the plaintiff's allegation was "extremely vague" and did not specify whether the defendant was speaking highly of the financial affairs relating to the companies, or some other aspects of the business. Id. at__; slip op at 11. This Court rejected as "too tenuous and speculative" the plaintiff's argument that one could reasonably infer from the plaintiff's allegation that the plaintiff had made an inquiry about the companies' financial health to which the defendant gave a response that he thought highly of the companies. Id.
In Mercurio, we relied on our Supreme Court's decision in Hord v Environmental Research Institute of Mich. There, our Supreme Court held that a legal duty of disclosure will most likely arise in a situation in which the plaintiff made an inquiry and the defendant gave an incomplete response that was otherwise truthful, but omitted key information. Hord, 463 Mich. at 412-413. In Hord, the plaintiff accepted a job with the defendant in Michigan and moved to Michigan from New Jersey. Hord, 463 Mich. at 400-402. When the plaintiff was laid off a year later, he sued for fraudulent misrepresentation and "silent fraud," alleging that the defendant had misrepresented its financial health. Id. at 400, 402. The case went to trial, the trial court denied the defendant's motion for a directed verdict, and a jury returned a verdict in favor of the plaintiff. Id. at 402. Following a remand, this Court affirmed the judgment for the plaintiff, but our Supreme Court reversed the judgment. Id. at 410-412. Before taking the job with the defendant, the plaintiff had met with its manager of the image processing systems division for an interview and was given voluminous documentation that included an operating summary for the company that contained its financial data through the fiscal year that ended September 30, 1991 (approximately one year before his interview in September or October 1992 and 18 months before he began his employment in March 1993). Id. at 401. The Supreme Court held that the evidence did not show that the plaintiff generally made any inquiry regarding the financial condition of the company, or requested updated financial information specifically. Id. at 412-413. The defendant had provided the plaintiff with basic documentation regarding the company, but not in response to any particular request for information by the plaintiff. Id. at 413.
Here, as in Mercurio and Hord, Church's allegation and underlying evidence is overly vague. Both Kohl and Ches averred that in separate conversations with Skawski in 2018, they told him that Sunset was not honoring its financial obligations to Church. They also stated that, going forward, Church expected to be made aware of any closings of homes built by Sunset for which Church had provided materials, and that Church itself would pick up any funds due and owing from Sunset to be disbursed from the closing proceeds. But ATA and Greco continued to conduct closings without notifying Church, and nothing was disbursed to Church out of the closing funds. Although the evidence showed that Church expressed its generalized concerns regarding closings conducted by Sunset and not being paid, there is no evidence that Church made specific inquiries that elicited responses by Skawski that were incomplete or misleading.
More critically, Church also failed to establish that it had a relationship with ATA and Greco that gave rise to legal or equitable obligation requiring the disclosures it claims were lacking. See Hord, 463 Mich. at 412. Outside of the overly vague concerns identified above, Church has not identified facts or authorities that impose a duty for the title agency or its agents to notify a supplier, like Church, of each closing of a home constructed by a contractor, like Sunset, or to ensure that Church was paid out of the sale proceeds.
Additionally, the circumstances of the interrelationship between ATA/Greco, Church, and Sunset point to no special duty or obligation for disclosure existing. See Hord, 463 Mich. at 412. Skawski testified that it was his understanding that Kohl and Esposito had entered into their own gentlemen's agreement, in which Church agreed not to pursue collection efforts or record any liens against any of the Sunset properties. Skawski also testified that Esposito told him that he had reached an agreement with Church regarding how Sunset was going to make payment to Church. Skawski was also aware that Esposito was attempting to secure financing on other property he owned to deal with the debt he had accrued on properties affiliated with Sunset. These facts, together with the absence of any evidence that Skawski affirmatively responded to specific inquiries by Church in a manner that was incomplete or misleading, demonstrate that there is no genuine issue of material fact regarding whether Skawski acted with an intent to deceive Church. Mercurio, __Mich App at__; slip op at 9. Accordingly, the trial court did not err by dismissing Church's silent-fraud claim under MCR 2.116(C)(10).
C. CIVIL CONSPIRACY
Church also argues that the trial court erred by dismissing its claim for civil conspiracy. We again disagree. "A civil conspiracy is a combination of two or more persons, by some concerted action, to accomplish a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or unlawful means." Jackson v Southfield Neighborhood Revitalization Initiative, __Mich App __; __N.W.2d__ (2023) (Docket No. 361397); slip op at 28, lv app held in abeyance __Mich___ (2024) (Docket No. 166320) (citation omitted). For a civil-conspiracy claim to exist, it is necessary to prove an independent, actionable tort. Id. For want of such an independent, actionable tort, Church's civil-conspiracy claim fails. As stated, we have concluded that the court did not err by also dismissing Church's claims for fraudulent misrepresentation and silent fraud. And Church has not challenged the trial court's dismissal of its claims for breach of fiduciary duty and innocent misrepresentation. Thus, because Church is unable to establish an independent, actionable tort, its claim for civil conspiracy was also properly dismissed under MCR 2.116(C)(10).
III. CHURCH'S CONSTRUCTION LIEN CLAIM AGAINST THE PATELS
Separate from its claims against ATA and Greco, Church argues that the trial court erred by denying its motion for summary disposition against the Patels and granting the Patels' cross- motion for summary disposition on its construction-lien claim. The trial court concluded that Church's lien did not attach to the Patels' lot because the Patels filed an affidavit indicating that they had paid Sunset for the improvements to the lot in accordance with the terms of their contract. The trial court was correct.
This case requires us to interpret provisions within the Construction Lien Act (CLA), MCL 570.1101, et seq., specifically, the trial court's reliance on MCL 570.1118a(1). We review questions of statutory interpretation de novo. Wells Fargo Rail Corp v Michigan, 344 Mich.App. 351, 358; 1 NW3d 373 (2022).
The goal of statutory interpretation is to determine and apply the intent of the Legislature. The first step in determining legislative intent is to examine the specific language of the statute. If the language is clear and unambiguous, judicial construction is neither required nor permitted, and courts must apply the statute as written. The provisions of a statute must be read in the context of the entire statute to produce a harmonious whole. This Court must consider the object of the statute and the harm it is designed to remedy, and apply a reasonable construction that best accomplishes the statute's purpose. [Yopek v Brighton Airport Ass'n, Inc, 343 Mich.App. 415, 424; 997 N.W.2d 481 (2022) (quotation marks and citations omitted).]
By way of background, "[a] construction lien is a security interest that a participant on a construction project takes in real property as security for their payment expectations." Legacy Custom Builders, Inc v Rogers, __Mich App__, __; __NW3d__ (2023) (Docket No. 359213); slip op at 4, citing MCL 570.1103; MCL 570.1107(1)." 'Construction lien' means the lien of a contractor, subcontractor, supplier, or laborer, as described in [MCL 570.1107]." MCL 570.1103. MCL 570.1107(1) states in relevant part:
Each contractor, subcontractor, supplier, or laborer who provides an improvement to real property has a construction lien upon the interest of the owner or lessee who contracted for the improvement to the real property, . . . the interest of an owner who has subordinated his or her interest to the mortgage for the improvement of the real property, and the interest of an owner who has required the improvement.... [MCL 570.1107(1).]
But a construction lien will not attach to property when the owner, who has made payment, files an affidavit and supporting evidence of payment with the court. See MCL 570.1118a(1). This provision on which the trial court relied, MCL 570.1118a(1), provides:
A claim of construction lien does not attach to a residential structure, to the extent payments have been made, if the owner or lessee files an affidavit with the court stating that the owner or lessee has paid the contractor for the improvement to the residential structure according to the contract, indicating in the affidavit the amount of the payment. The owner or lessee shall attach to the affidavit copies of the contract, any change orders, and any evidence of the payment that the owner or lessee has, including, but not limited to, a canceled check or a credit card or other receipt.
As noted, MCL 570.1118a precludes a construction lien from attaching to a residential structure to the extent that the owner has paid the "contractor" for an improvement to the property according to a contract. Here, Church challenges the factual accuracy of the Patels' representation that they paid the "contractor" within the meaning of MCL 570.1118a(1). As Church observes, the Patels' affidavit indicates that they paid Sunset, not Church. While Church frames the issues in a manner that challenges the validity of the homeowners' affidavit itself, the pivotal issue is whether Church is a "contractor" under the CLA. The trial court rejected Church's argument that it, as the lienholder, is the "contractor" for purposes of MCL 570.1118a(1), and therefore, the Patels' averment in their affidavit that they paid Sunset should be deemed insufficient to establish that they paid the contractor, thereby triggering application of the statute. The court noted that the CLA defines a "contractor" as "a person who, pursuant to a contract with the owner or lessee of real property, provides an improvement to real property." MCL 570.1103(5). As the trial court observed, there was no evidence that Church provided an improvement to the Patels' property pursuant to any contract with the Patels, the owners of the property. The court correctly determined that Church was actually a "supplier" under the CLA. MCL 570.1106(6) defines a "supplier" as "a person who, pursuant to a contract with a contractor or a subcontractor, leases, rents, or in any other manner provides material or equipment that is used in the improvement of real property."
Although Church argues that it has an enforceable construction lien under MCL 570.1107(1), which provides for the creation of a lien in favor of contractors, subcontractors, suppliers, and laborers who provide an improvement to real property, the plain language of MCL 570.1118a(1) specifically states that a construction lien will not attach to a residential structure if an owner files an affidavit with the court, "stating that the owner . . . has paid the contractor for the improvement to the residential structure according to the contract." The Patels filed the requisite affidavit. We disagree with Church that it, and not Sunset, qualifies as the "contractor" within the meaning of this statute. By definition, a "contractor" can only be a party who provided an improvement "pursuant to a contract with the owner." MCL 570.1103(5). The parties do not dispute that Church and the Patels never entered into a contract for Church to provide an improvement to the Patels' real property. On the contrary, the submitted evidence demonstrated that the Patels contracted with Sunset for the improvement to their residential property. Because Church did not provide an improvement to the Patels' property pursuant to a contract with the Patels, it cannot be the "contractor" as contemplated by MCL 570.1118a(1). Rather, the "contractor" is Sunset, the party who contracted with the Patels. Because the Patels filed the required affidavit, supported by documentary evidence, indicating that it paid Sunset for the improvements to their property, the trial court did not err by holding that Church's construction lien did not attach to the property. Accordingly, the trial court did not err by denying Church's motion for summary disposition and granting summary disposition in favor of the Patels with respect to Church's construction-lien claim.
IV. ATA AND GRECO'S REQUEST FOR SANCTIONS
In their cross-appeal, ATA and Greco argue that all of Church's claims against them were frivolous, and therefore, the trial court erred by not awarding them attorney fees and costs. We disagree.
"This Court reviews for an abuse of discretion a trial court's decision to award sanctions for a frivolous filing." Johnson v Oakwood Healthcare, Inc, 336 Mich.App. 333, 341; 970 N.W.2d 389 (2021). A trial court abuses its discretion when its decision falls outside the range of reasonable and principled outcomes. Id. We review the trial court's factual findings, including a finding of frivolousness, for clear error. Id. A finding is clearly erroneous if this Court is left with a definite and firm conviction that the trial court made a mistake. Id.
MCR 1.109 provides, in pertinent part:
(5) Effect of Signature. The signature of a person filing a document, whether or not represented by an attorney, constitutes a certification by the signer that:
(a) he or she has read the document;
(b) to the best of his or her knowledge, information, and belief formed after reasonable inquiry, the document is well grounded in fact and is warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law; and
(c) the document is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
(6) Sanctions for Violation. If a document is signed in violation of this rule, the court, on the motion of a party or on its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the document, including reasonable attorney fees. The court may not assess punitive damages.
(7) Sanctions for Frivolous Claims and Defenses. In addition to sanctions under this rule, a party pleading a frivolous claim or defense is subject to costs as provided in MCR 2.625(A)(2). The court may not assess punitive damages.
Similarly, MCR 2.625(A)(2) provides:
Frivolous Claims and Defenses. In an action filed on or after October 1, 1986, if the court finds on motion of a party that an action or defense was frivolous, costs shall be awarded as provided by MCL 600.2591.
MCL 600.2591 states:
(1) Upon motion of any party, if a court finds that a civil action or defense to a civil action was frivolous, the court that conducts the civil action shall award to the prevailing party the costs and fees incurred by that party in connection with the civil action by assessing the costs and fees against the nonprevailing party and their attorney.
(2) The amount of costs and fees awarded under this section shall include all reasonable costs actually incurred by the prevailing party and any costs allowed by law or by court rule, including court costs and reasonable attorney fees.
(3) As used in this section:
(a) "Frivolous" means that at least 1 of the following conditions is met:
(i) The party's primary purpose in initiating the action or asserting the defense was to harass, embarrass, or injure the prevailing party.
(ii) The party had no reasonable basis to believe that the facts underlying that party's legal position were in fact true.
(iii) The party's legal position was devoid of arguable legal merit.
Although ATA and Greco requested sanctions on the ground that Church's claims were frivolous, the trial court did not address their request. Although Church has not challenged the trial court's dismissal of its claims for breach of fiduciary duty and innocent misrepresentation, and we have concluded that Church's claims for fraudulent misrepresentation and silent fraud were properly dismissed, "[a] claim is not frivolous merely because the party advancing the claim does not prevail on it." Grass Lake Improvement Bd v Dep't of Environmental Quality, 316 Mich.App. 356, 365; 891 N.W.2d 884 (2016) (citation omitted). Because the trial court did not address this issue, and because a finding of frivolousness is subject to review for clear error, Peterson v Oakwood Healthcare, Inc, 336 Mich.App. 333, 341; 970 N.W.2d 389 (2021), we remand this case to the trial court for it to initially address and decide whether ATA and Greco should be awarded sanctions because Church's claims were frivolous. See Apex Laboratories Int'l, Inc v City of Detroit, 331 Mich.App. 1, 10; 951 N.W.2d 45 (2020) (as an error-correcting court, this Court is not the appropriate forum to decide issues as an initial matter).
ATA and Greco also request that they be awarded damages because Church's appeal qualifies as vexatious under MCR 7.216(C). However, a party's request for damages under MCR 7.216(C) "must be contained in a motion filed under [MCR 7.211(C)(8)]" and "[a] request that is contained in any other pleading, including a brief filed under MCR 7.212, will not constitute a motion under this rule." MCR 7.211(C)(8). Such a motion may be filed "at any time within 21 days after the date of the order or opinion that disposes of the matter that is asserted to have been vexatious." MCR 7.211(C)(8). ATA and Greco have not raised this issue in a separate motion. Accordingly, we deny ATA and Greco's request for damages under MCR 7.216(C)(1), without prejudice to them raising this issue in an appropriate motion under MCR 7.211(C)(8). See Barrow v City of Detroit Election Comm, 305 Mich.App. 649, 683-684; 854 N.W.2d 489 (2014).
V. CONCLUSION
We affirm in part and remanded for further proceedings regarding ATA and Greco's request for sanctions. We do not retain jurisdiction.
Allie Greenleaf Maldonado Sima G. Patel Noah P. Hood