Background
Title Resources Guaranty Company underwrote title insurance for the buyer of the Curtisses’ home. Its issuing agent, Liberty Title Agency, requested a mortgage payoff statement but received one for nearby homeowners Thomas and Melissa Francis. Liberty Title failed to detect the error, and University Bank applied the closing funds to the Francis mortgage, paid it off, and recorded a discharge, leaving the Curtiss mortgage in place.
Thomas Francis alerted Liberty Title to the mistake. The Francises declined a proposed arrangement requiring them to apply for a new loan and undergo credit and financial disclosures, but offered to execute a private note or mortgage that would restore their prior position. After Liberty Title and University Bank rejected that alternative, Title Resources—without first satisfying the Curtiss mortgage—recorded a notice of lis pendens against the Francis property and sued for an equitable mortgage and unjust enrichment. The circuit court dismissed the complaint with prejudice under MCR 2.116(C)(8). Title Resources then paid the Curtiss mortgage and unsuccessfully sought reconsideration.
The Court’s Holding
The Michigan Court of Appeals affirmed. It declined to consider the effect of Title Resources’ postjudgment payment of the Curtiss mortgage because that fact arose only after dismissal, was first raised on reconsideration, and was omitted from the insurer’s statement of questions presented. The later payment therefore did not undermine the ruling that the original complaint failed to state a claim.
An equitable mortgage was unavailable because Title Resources had no prior relationship with the Francises, the Francises never intended to give it a lien, and they were innocent third parties who had acted in good faith. Title Resources also lacked clean hands because it encumbered their property and sued before suffering any loss, and it potentially had adequate legal remedies against University Bank or Liberty Title.
The unjust-enrichment claim likewise failed because Title Resources conferred no benefit on the Francises: Liberty Title sent the funds, and University Bank mistakenly discharged their mortgage. Title Resources had incurred no loss when it filed suit or when summary disposition was granted, and its later payment of the unrelated Curtiss mortgage did not confer a benefit on the Francises. The availability of potential legal remedies and the clean-hands doctrine independently supported dismissal.
Key Takeaways
- An equitable mortgage generally requires an intent to use identifiable property as security; it cannot be imposed merely to shift losses from third parties’ errors to innocent homeowners.
- Unjust enrichment requires a benefit received from the plaintiff and an inequity to the plaintiff from its retention. A benefit supplied through other entities’ mistakes does not satisfy that requirement here.
- A postjudgment factual development raised for the first time on reconsideration—and omitted from the appellate statement of questions presented—does not retroactively cure a deficient complaint.
Why It Matters
The decision limits the use of equitable remedies to repair title-closing errors at the expense of homeowners who neither caused the mistake nor agreed to new financing. A title insurer must establish the required relationship, benefit, loss, and equitable entitlement rather than treating innocent property owners as the default source of reimbursement.
The opinion also underscores the importance of posture and preservation: claims dismissed under MCR 2.116(C)(8) are assessed from the pleaded circumstances existing at dismissal, and later events must be properly preserved and presented to receive appellate consideration.