Background
Shiree Broaden loaned Milton Tinnon $20,000. Tinnon executed a quitclaim deed conveying Detroit property to Broaden, along with a document stating that the property would be used as security for the loan and that Broaden would receive repayment in about 30 days. According to Broaden, the agreement allowed her to record the deed and take ownership if Tinnon failed to repay the loan.
After nearly a year without repayment, Broaden recorded her deed. Tinnon later executed and recorded another quitclaim deed conveying the property to CKT Enterprises LLC. CKT sued to quiet title and obtain declaratory relief, contending that the deed to Broaden was intended as security and therefore constituted an equitable mortgage. The trial court concluded that the deed was an absolute conveyance, dismissed CKT’s complaint, and quieted title in Broaden’s favor.
The Court’s Holding
The Michigan Court of Appeals reversed the grant of summary disposition to Broaden and the order quieting title in her favor. Although a party seeking to establish that an absolute deed is an equitable mortgage bears a heavy burden, the controlling consideration is the parties’ intent. Broaden, as the moving party, failed to address the equitable-mortgage theory or initially demonstrate that the deed was not intended as security for the loan.
Even treating Broaden’s motion as asserting that CKT lacked evidence supporting an essential element of its claim, summary disposition was improper. The accompanying Exhibit “A” expressly stated that the property would be “used as security” for the $20,000, and Broaden presented no affidavit or sworn testimony disputing that evidence. That document created a genuine issue of material fact concerning whether the parties intended an equitable mortgage. The court nevertheless declined to grant summary disposition to CKT, leaving the factual question for further proceedings on remand.
The court also concluded that Broaden waived her standing argument by failing to raise it in her first responsive pleading. It declined to resolve her unclean-hands theory because doing so would require appellate factfinding on an issue the trial court had not addressed, but allowed her to pursue that issue on remand.
Key Takeaways
- An absolute deed may be treated as an equitable mortgage when the parties intended the conveyance to secure a debt.
- A contemporaneous document expressly describing property as “security” can create a genuine factual dispute about the parties’ intent.
- A summary-disposition movant must address the claimant’s equitable-mortgage theory and support the motion with evidence; unchallenged documentary evidence may defeat the motion.
Why It Matters
The decision emphasizes that Michigan courts look beyond the face of a deed when evidence suggests that the parties intended it as loan security. Parties cannot obtain summary disposition merely by relying on the deed’s absolute form while ignoring contemporaneous documents bearing on the transaction’s substance.
The ruling does not establish that CKT owns the property or that Broaden’s deed is an equitable mortgage. It holds only that the evidence presents a genuine factual dispute requiring further proceedings.