Media One Communications LLC v. MacAtawa Bank Corporation
333153
| Mich. Ct. App. | Jul 13, 2017Background
- Media One contracted with Partners Fore Development Group (PFD) to install and maintain fiber optic infrastructure and to be paid under a separate Fiber Optic Agreement.
- PFD granted Media One an easement to enter the Macatawa Legends property for installation/maintenance; the easement stated it "shall be subject to" the Fiber Optic Agreement.
- Macatawa Bank (mortgagee) executed a recorded consent to the easement, agreeing to "honor and recognize" the rights made by the easement.
- PFD did not pay Media One and later defaulted on its mortgage; the bank foreclosed and purchased the property at sheriff's sale.
- Media One sued the bank for breach of contract seeking payment under the Fiber Optic Agreement; the trial court granted defendant summary disposition under MCR 2.116(C)(8).
- On appeal the court affirmed, holding the bank's consent to the easement did not create an obligation to pay PFD's contractual debts to Media One.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the bank's consent to the easement created a contractual obligation to pay PFD's debts under the Fiber Optic Agreement | Bank's consent to "honor and recognize" the easement and easement being "subject to" the Fiber Optic Agreement made the bank liable to pay Media One after foreclosure | The consent only preserved the easement against foreclosure; the bank did not assume PFD's contractual payment obligations | No — consent preserved easement rights to use land but did not constitute an assumption of PFD's payment obligations |
| Whether the phrase "subject to" in the easement creates an affirmative right to payment enforceable against the mortgagee | "Subject to" imports the Fiber Optic Agreement rights, including payment, into the easement | "Subject to" limits or subordinates the easement to terms of the contract; it does not create new affirmative rights against the mortgagee | No — "subject to" is a limitation on the easement, not a grant of a payment entitlement enforceable against the bank |
| Whether a foreclosure purchaser (the bank) becomes successor in contract and liable for prior owner’s contractual obligations | Foreclosure purchaser who acquires title after sale becomes liable on obligations tied to the property (Media One argued bank acquired obligations) | Foreclosure purchaser takes title subject to pre-existing recorded interests but is not generally liable for the former owner's personal contractual debts absent clear assumption | No — purchaser at foreclosure is not obligated to perform prior owner's contracts; no privity or clear assumption shown |
Key Cases Cited
- Diem v. Sallie Mae Home Loans, Inc., 307 Mich. App. 204 (standard for de novo review of summary disposition)
- Klein v. HP Pelzer Auto Sys., Inc., 306 Mich. App. 67 (contract existence is a question of law)
- Sherman-Nadiv v. Farm Bureau Gen. Ins. Co. of Mich., 282 Mich. App. 75 (contract interpretation is a question of law)
- Bank of Am., N.A. v. First Am. Title Ins. Co., 499 Mich. 74 (elements plaintiff must prove for breach of contract)
- Wilkie v. Auto-Owners Ins. Co., 469 Mich. 41 (contractual duties derive from agreement terms)
- Kamalnath v. Mercy Mem. Hosp. Corp., 194 Mich. App. 543 (burden to show existence of contract)
- AFSCME Council 25 v. Wayne Co., 292 Mich. App. 68 (contract does not ordinarily bind nonparties; nonparties may be bound by ordinary contract principles)
- Bandit Indus., Inc. v. Hobbs Intern., Inc., 463 Mich. 504 (courts will not presume assumption of another's debt absent clear expression)
- Hanson v. Huetter, 339 Mich. 130 (easement granted after mortgage does not survive foreclosure absent mortgagee consent)
- Heydon v. MediaOne, 275 Mich. App. 267 (definition and scope of an easement)
- Blackhawk Dev. Corp. v. Village of Dexter, 473 Mich. 33 (easement conveys rights incidental or necessary for reasonable enjoyment)