Kratze v. Independent Order of Oddfellows
442 Mich. 136, 500 N.W.2d 115 (1993)
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Rule of Law:
A court must apply a balancing test, weighing the relative hardships and equities between the parties, before issuing a mandatory injunction to remove an innocent structural encroachment. If the hardship to the defendant in removing the encroachment is grossly disproportionate to the harm suffered by the plaintiff, the court should deny the injunction and award damages instead.
Facts:
- In 1948, Oddfellows Lodge No. 11 purchased property with an existing building foundation and constructed its meeting hall upon it.
- In September 1985, a plaintiff, an experienced developer, entered into an option agreement to purchase the adjacent property for $18,000 with the intent to build apartments.
- Shortly after entering the option, a survey revealed to the plaintiff that the corner of the Lodge's building encroached 1.2 feet onto the property he intended to purchase.
- In May 1986, with full knowledge of the encroachment, the plaintiff proceeded to purchase the property for the agreed-upon price of $18,000.
- The plaintiff was subsequently unable to obtain title insurance or construction financing for his project because of the title defect created by the encroachment.
- The Lodge was unaware of the encroachment until the plaintiff brought it to their attention after he purchased the land.
Procedural Posture:
- The plaintiff sued Oddfellows Lodge No. 11 in Wayne Circuit Court (the trial court) for damages and injunctive relief.
- Following a bench trial, the trial court ordered the Lodge to remove the encroachment and awarded the plaintiff damages of $797,215.46.
- The Lodge, as appellant, appealed to the Michigan Court of Appeals.
- The Court of Appeals affirmed the trial court's injunction ordering removal of the encroachment but reversed most of the damages award, remanding for a new trial on that issue.
- The Lodge, as appellant, sought and was granted leave to appeal to the Supreme Court of Michigan.
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Issue:
Does a court err by issuing a mandatory injunction to remove a structural encroachment without first balancing the relative hardships to the parties and considering their conduct?
Opinions:
Majority - Boyle, J.
Yes. A court errs by issuing a mandatory injunction to remove a structural encroachment without first balancing the relative hardships and equities. This balancing process is essential to prevent disproportionate harm and to avoid both judicial approval of 'private eminent domain' by an encroacher and the potential for extortion by an encroachee. Here, the encroachment was unintentional, as the Lodge built on a pre-existing foundation. The hardship to the Lodge in removing the encroachment would be immense, as testimony suggested the building would collapse. In contrast, the hardship to the plaintiff is slight; he can still develop his property by excluding the small encroached-upon strip from his plans. Crucially, the plaintiff purchased the property with full knowledge of the encroachment, which weighs heavily against granting him injunctive relief. Therefore, the injunction should be vacated, and the remedy should be limited to damages.
Analysis:
This case solidifies the 'relative hardship' or 'balancing of the equities' doctrine as the standard for resolving unintentional structural encroachment disputes in Michigan. It moves away from a strict property rights approach, which would favor an automatic injunction, toward a more flexible equitable remedy. The decision establishes that a plaintiff's own conduct, particularly purchasing property with full knowledge of an existing encroachment ('coming to the nuisance'), significantly weakens their claim for injunctive relief. This precedent serves to prevent property owners with minor grievances from leveraging the threat of a costly injunction to extort large settlements from innocent encroachers.
