## Facts

- Bailey and Delores Oliver bought residential property by warranty deed from Bruce and Michelle Ireland.
- The Irelands had received the same property earlier by warranty deed from Rosetta L. Walker.
- Neighbor Marie A. McCausey (with additional plaintiffs) sued the Olivers to quiet title to a portion of the Olivers’ property, claiming ownership by adverse possession.
- The Olivers moved for summary disposition, and the trial court dismissed the quiet-title/adverse-possession claim after finding plaintiffs failed to establish adverse possession.
- After winning on the merits, the Olivers sought to recover their defense costs and attorney fees from the Irelands, arguing that Michigan’s warranty-deed statute, MCL 565.151, required the grantors to “warrant and defend” the title and therefore to cover the Olivers’ expenses in defending the suit.
- The Olivers pursued that request through a third-party claim; the Irelands, in turn, pursued Walker on the same warranty theory.
- The trial court ultimately denied fee shifting and ordered each party to bear its own costs and attorney fees because the adverse-possession claim failed and there was no breach of the warranty deed.
- The Olivers appealed as of right, challenging only the denial of costs and attorney fees (not the dismissal of the adverse-possession claim).

## Issues

1. Under MCL 565.151 and the warranty-deed covenant to “warrant and defend” title against “all lawful claims,” must a grantor reimburse a grantee’s attorney fees and costs incurred in successfully defeating a third party’s unsuccessful adverse-possession/quiet-title action?

## Decision

- The Michigan Court of Appeals affirmed the order denying the Olivers’ request for costs and attorney fees.
- The court held that the statutory covenant to “warrant and defend” against “all lawful claims” does not require the grantor to pay a grantee’s litigation expenses when the third party’s title claim fails and the grantee’s title is not defeated.
- Because the plaintiffs did not establish adverse possession, there was no failure of title and no breach of the warranty deed; therefore, the grantors had no obligation to indemnify the Olivers for their defense expenses.

## Legal Principles

- Michigan follows the American rule: attorney fees are not recoverable as costs or damages unless authorized by statute, court rule, or a recognized exception.
- MCL 565.151 implies standard warranty covenants in a warranty deed, including that the grantor will “warrant and defend the title … against all lawful claims.”
- In the warranty-deed context, “lawful claims” means claims based on a superior (paramount) title that results in a failure of the title conveyed, not any lawsuit filed against the grantee regardless of merit.
- A covenant of warranty is generally not breached, and damages do not arise, unless the grantee suffers an actual or constructive eviction due to a paramount title.
- When a third party’s adverse-possession claim is dismissed and the grantee’s title remains intact, the statutory warranty covenant does not create a right to recover defense attorney fees and costs from the grantor.

## Conclusion

The Court of Appeals held that the Olivers could not shift their attorney fees and costs to their grantors under MCL 565.151 after successfully defeating an adverse-possession quiet-title suit, because the warranty-deed duty to “warrant and defend” against “lawful claims” applies only to successful, superior-title claims that cause a failure of title, and no such failure occurred here.


McCausey v. Oliver, 253 Mich. App. 703 (2003)