TCL ENTERPRISES INC V MALINO PROPERTIES LLC
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STATE OF MICHIGAN
COURT OF APPEALS
TCL ENTERPRISES, INC., and J. MICHAEL
SHEDD,
UNPUBLISHED
June 12, 2008
Plaintiffs-Appellees/Cross
Appellants,
v
No. 277016
Wayne Circuit Court
LC No. 05-535541-CK
MALINO PROPERTIES, L.L.C.,
Defendant/Cross DefendantAppellant-Cross Appellee,
and
TRANSNATION TITLE INSURANCE
COMPANY,
Defendant/Cross-Plaintiff.
Before: Whitbeck, P.J., and O’Connell and Kelly, JJ.
PER CURIAM.
In this contract dispute, defendant Malino Properties, L.L.C., appeals as of right the trial
court’s order granting summary disposition in favor of plaintiffs TCL Enterprises, Inc. and
Michael J. Shedd.1 Plaintiffs cross appeal the trial court’s determination of the amount of
damages. We reverse the trial court’s grant of summary disposition and remand for further
proceedings.
1
Defendant Transnation Title Insurance Company is not a party to this appeal. The trial court
entered an order dismissing all claims by and against Transnation. According to the original
complaint, TCL was dissolved in July 2004 and Shedd is TCL’s successor in interest. For the
sake of clarity, although the term plaintiffs is used throughout, Shedd is not otherwise referenced
individually or separately from TCL.
-1-
On April 20, 1999, TCL entered into a land contract under which Eileen Bluestone, as
trustee of the Eileen R. Bluestone Revocable Living Trust Agreement, and Bruno and Mildred
Manni agreed to sell, and TCL agreed to purchase, a parcel of land in Metroplex Industrial Park
in Romulus, Michigan, for $52,000 (“the Bluestone Land Contract”). In September 2002, TCL
and Michael Leipsitz, “on behalf of an entity to be formed,” (Malino),2 entered into an agreement
of sale under which TCL agreed to sell and Malino agreed to purchase:
Parcel 1: Lot 4 and the north 20 ft. of Lot 3 of Metroplex. Ind. Park Subdivision 1
...
Parcel 2: Lots 5 & 6, & the South 25 ft. of Lot 7 of Metroplex. Ind. Park
Subdivision 1 . . .
being known as: 7010 Metro Plex Street, together with all improvements and
appurtenances, ____ if any, now on the premises, and to pay therefor the sum of
$750,000* Dollars, subject to the existing building and use restrictions, easements
and zoning ordinances, if any, upon the following conditions: * See item 12
Addendum
The addendum provided that TCL would assign its interest in the Bluestone Land Contract to
Malino and Malino would assume the existing land contract balance. Malino’s monthly payment
of $1,352 to “vendor”3 was to be in lieu of land contract payments to TCL until the balance on
the Bluestone Land Contract was paid in full. The addendum also provided that TCL would
assign its rights, interest, and rents in an existing lease agreement for parcel 2 to Malino at
closing. In turn, Malino agreed to the assignment of $5,648 per month of the lease payments to
TCL’s lender, and agreed that each lease payment assigned to TCL’s lender would be in lieu of a
land contract payment to TCL. Together, the assigned $5,648 lease payment and the $1,352
payment under the Bluestone Land Contract equaled a $7,000 monthly obligation.
On November 1, 2002, TCL and Malino executed a land contract (“2002 Land Contract”)
under which TCL agreed to sell and Malino agreed to purchase:
Parcel 2:
Lots 5, 6 and the South 25 feet of Lot 7, Metroplex Industrial Park Subdivision
No. 1 . . .
More commonly known as: 7010 Metroplex
2
Both the agreement of sale and the addendum list Leipsitz as the Purchaser, but he signed both
documents on behalf of “an entity to be formed” and retained his right to assign the agreement
“to an assignee of its choice.” None of the parties dispute that Malino was the ultimate
purchaser.
3
The sellers under the Bluestone Land Contract.
-2-
The agreement provided that “the consideration for the sale of the above described premises”
was $750,000, of which $75,000 had already been paid. The $675,000 balance, plus interest at a
rate of 7.5 percent a year, was to be paid in monthly installments of $7,000 beginning December
1, 2002.
Also on November 1, 2002, TCL executed multiple documents, including: a warranty
deed, by which it conveyed parcel 2 to Malino for $750,000; an assignment of the lease on parcel
2 to Malino; a quitclaim deed conveying parcel 1 to Malino for one dollar; and an assignment to
Malino of its interest in the Bluestone Land Contract, showing a $43,441.69 balance remaining
on the contract. On November 5, 2002, Malino, TCL, Brunno Manni, Mildred Manni, and
Eileen Bluestone, as trustee for the Bluestone Trust, executed an amendment to the Bluestone
Land Contract reflecting TCL’s assignment of its right, title, and interest in the contract to
Malino and providing that: the balance to be assumed by Malino was $43,441.69; the balance
was to be paid in monthly installments of no less than $1,352, “which includes an annual interest
rate of 7.5%”; and the principal balance was to be paid within 36 months from the date of
assignment.
In December 2005, plaintiffs filed a complaint in the trial court alleging that Malino
breached the 2002 Land Contract when it paid off the underlying mortgage on parcel 2 in
December 2004 and “never made another payment under the Land Contract.” Plaintiffs
ultimately filed a motion for summary disposition, arguing that there was no genuine issue of
material fact because, if Malino paid the approximately $583,000 balance remaining on TCL’s
mortgage on parcel 2 on November 1, 2002, Malino still owed TCL approximately $92,000.
Plaintiffs claimed that the $750,000 purchase price set forth in the 2002 Land Contract was only
for parcel 2, but, even if the court found that it also included parcel 1, they were still entitled to
$49,000 in damages. The trial court granted the motion for summary disposition. On the record,
the court found that the 2002 Land Contract concerned only parcel 2, but awarded plaintiffs only
$49,000 in damages.4
Malino first argues that, in light of the absence of evidence of separate consideration to
be given for parcel 1 and the express incorporation of the agreement of sale in the 2002 Land
Contract, the trial court erred in concluding that the agreement of sale was not incorporated by
reference into the 2002 Land Contract. We agree.
We review de novo questions of contract interpretation. Dobbelaere v Auto-Owners Ins
Co, 275 Mich App 527, 529; 740 NW2d 503 (2007). “The fundamental goal of contract
interpretation is to determine and enforce the parties’ intent by reading the agreement as a whole
and applying the plain language used by the parties to reach their agreement.” Id. If additional
terms are found in a document referenced by another instrument, we interpret the terms by
reading the two writings together. Forge v Smith, 458 Mich 198, 207; 580 NW2d 876 (1998).
However, because parties to a contract may modify its terms by later agreement, Adell
Broadcasting Corp v Apex Media Sales, Inc, 269 Mich App 6, 11; 708 NW2d 778 (2005), we
4
$92,000 minus the approximately $43,000 Malino paid for parcel 1 under the Bluestone Land
Contract.
-3-
must consider whether the 2002 Land Contract incorporates the agreement of sale, as Malino
argues, or constitutes a contract modification, as plaintiffs argue.
The 2002 Land Contract states that “the consideration for the sale of the above described
premises,” which is only parcel 2, is $750,000. However, reading the agreement of sale, the
addendum, the 2002 Land Contract, and the assignment of purchaser’s interest in 2002 Land
Contract together, the documents do not conflict. Rather, the purchase agreement and the
assignment of purchaser’s interest in 2002 Land Contract, both executed on November 1, 2002,
are not only consistent with the terms of the earlier-executed agreement of sale and its
addendum, they are part of the same agreement. The agreement of sale contemplates that, while
parcel 2 would be conveyed to Malino by land contract, an assignment of TCL’s interest in the
Bluestone Land Contract might be used to convey TCL’s interest in parcel 1:
D. Payment of the sum of $75,000 Dollars in cash or certified check, and the
execution of a Land Contract upon mutually acceptable form with terms not
inconsistent here within, acknowledging payment of that sum and calling for the
payment of the remainder of the purchase money within 3 years from the date of
Contract in monthly $7,000.00 * dollars each, which includes interest payments at
the rate of 7.5 per cent annum (sic), and which DO NOT include prepaid taxes
and insurance. * See Item 12 Addendum
As to Parcel 1, if the Seller’s title to said land is evidenced by an existing land
contract with unperformed terms and conditions substantially as above set forth
and the cash payment to be made by the undersigned on consummation hereof
will pay out the equity, an assignment and conveyance of the vendee’s interest in
the land contract, with an agreement by the undersigned to assume the balance
owing thereon, will be accepted in lieu of the contract.
Moreover, the 2002 Land Contract makes explicit reference to the agreement of sale, the
addendum, and the assignment of the Bluestone Land Contract, as follows:
Additional Clauses
***
(x) Both parties agree that the Seller’s interest in a certain land contract between
Eileen R. Bluestone, as trustee of the Eileen R. Bluestone Revocable Living Trust
under Agreement dated August 20, 1993 and Bruno Manni and Mildred A.
Manni, husband and wife, as seller and TCL Enterprises, Inc., as purchaser, is
hereby being assigned to the buyer, Malino Properties, L.L.C.
(y) Both parties agrees [sic] that the Agreement to Sale [sic] dated September 9,
2002, and it’s [sic] addendum is hereto attached and made part of said land
contract. The Addendum of the Agreement of Sale shall be followed as to the
payments of land contract and as to the assignment of the underlying land
contract. The monthly land contract payment will be applied to both principal
and interest of said land contract.
-4-
(z) The Seller has agreed to convey their [sic] purchaser’s interest in a land
contract to Malino Properties, L.L.C. for a parcel of land described as follows:
Lot 4 and the North 20 feet of Lot 3, Metroplex Industrial Park Subdivision No. 1,
. . . . [Emphasis added.]
These additional clauses are specifically referenced in the “terms of payment” section of the
2002 Land Contract, which states that the monthly payments are “7000.00* (SEE
ADDITIONAL CLAUSES).”
The addendum makes clear that monthly payments of $1,352 on the Bluestone Land
Contract, plus the assignment of $5,648 per month of the lease payments by Malino to TCL’s
lender, will be in lieu of the $7,000 monthly payments recited in the 2002 Land Contract:
1. Seller shall assign and convey his vendee’s interest in the land contract to
Purchaser at closing, subject to the terms and conditions hereof. Purchaser will
assume and agrees to pay the existing Land Contract balance including payments
in arrears. Purchasers [sic] monthly payment of $1,352.00 to vendor monthly,
shall be in lieu of Land contract payments to Seller until assumed Land Contract
is paid in full.
2. Seller hereby agrees to assign his rights, interest and rents in lease agreement
dated May 10, 2001 by Seller and USF Worldwide, Inc to Purchaser at closing.
3. The Purchaser hereby consents to the assignment of $5648.00 per month of the
lease payments to Seller’s Lender. Each lease payment assigned to the Seller’s
Lender will be in lieu of land contract payment to the Seller. [Emphases added.]
The documents clearly reflect that the parties intended their agreements with respect to parcels 1
and 2 to be part of the same transaction, and the payments on the Bluestone Land Contract were
to be credited toward the $7,000 monthly payment on the 2002 Land Contract. Therefore, the
trial court erred in concluding, as a matter of law, that the agreement of sale was not incorporated
by reference into the 2002 Land Contract and that the document concerned only parcel 2.
Having found that the 2002 Land Contract concerns both parcels and that the agreement
of sale and its addendum are part of the parties’ agreement, we agree with Malino that its
payments on the Bluestone Land Contract were payments toward the $750,000 purchase price
under the 2002 Land Contract. Accordingly, the trial court properly credited Malino with these
payments.5
5
Although we agree with plaintiffs that the trial court’s award of damages was inconsistent with
its finding that the purchase price under the 2002 Land Contract pertained only to parcel 2, this
inconsistency is irrelevant in light of our findings that the 2002 Land Contract pertained to both
parcels and that the trial court erred in granting summary disposition to plaintiffs.
-5-
Malino next argues that the trial court erred in granting summary disposition for plaintiffs
because there was a genuine issue of fact regarding whether the total amount Malino paid to TCL
or its creditors was less than the $750,000 contract price. Because we find that plaintiffs failed
to meet their initial burden of supporting their position with documentary evidence, we agree.
We review de novo a trial court’s decision on a motion for summary disposition. Rose v
Nat’l Auction Group, 466 Mich 453, 461; 646 NW2d 455 (2002). When reviewing a decision
made pursuant to MCR 2.116(C)(10), “we consider the affidavits, pleadings, depositions,
admissions, and other documentary evidence submitted by the parties in the light most favorable
to the party opposing the motion.” Id. Summary disposition is appropriate when “there is no
genuine issue regarding any material fact and the moving party is entitled to judgment as a
matter of law.” Id. “The moving party must specifically identify the undisputed factual issues
and has the initial burden of supporting its position with documentary evidence.” ER Zeiler
Excavating, Inc v Valenti Trobec Chandler, Inc, 270 Mich App 639, 644; 717 NW2d 370 (2006).
“The responding party must then present legally admissible evidence to demonstrate that a
genuine issue of material fact remains for trial.” Id.
We find that plaintiffs failed to meet their initial burden. They did not ground their claim
that Malino failed to meet its payment obligations under the 2002 Land Contract in documentary
evidence of Malino’s actual payments. Instead, they essentially argued that the court should
assume that Malino paid approximately $583,000, in addition to the $75,000 paid at closing,
leaving $92,000 unpaid.6 Malino, however, claims that the relevant amount to credit against the
$675,000 due under the 2002 Land Contract is the amount Malino actually paid on TCL’s
mortgage and the Bluestone Land Contract.
Genuine issues of fact remain regarding the payments Malino made, how each payment
was allocated to the principal and interest remaining on the 2002 Land Contract, and, ultimately,
whether Malino met its payment obligations under the contract. The 2002 Land Contract
provides that the $7,000 monthly payment would be applied to interest and then to principal.
The record contains a spreadsheet tracking the payments made to TCL’s lender on its mortgage
on parcel 2, the balance remaining on the principal, and the interest due. It shows that between
November 5, 2002 (the first entry after the parties’ closing on November 1, 2002) and December
7, 2004, 26 payments of $4,465 to $5,648 were made,7 and that the mortgage was paid off on
December 24, 2004, with a payment of $552,453.50. The record does not contain a listing of
payments made on the Bluestone Land Contract, but it does show that the balance was paid off
on December 27, 2004, with a payment of $13,163.43.
6
$750,000-$75,000 (paid at closing)-$583,000 = $92,000.
7
It is not clear whether these payments were made directly by Malino, or were lease payments
rendered to TCL’s Lender in lieu of 2002 Land Contract payments pursuant to the terms of
addendum as incorporated by “Additional Clause” (y). Regardless of how the payments were
made, however, Malino should receive credit for the payments.
-6-
Plaintiffs point out that the 2002 Land Contract specifically provides that: “It is mutually
understood that the monthly installment payments specified in said contract are insufficient to
fully pay the obligation owing within the term of said contract, and that there will be a lump-sum
payment due Seller upon completion of said term.” But Malino did not simply make payments
of $7000 a month until the expiration of the term on December 1, 2005. Instead, Malino paid off
the balance of the TCL mortgage on December 23, 2004, with a payment of $552,336.62, and
paid off the balance of the Bluestone Land Contract on December 27, 2004, with a payment of
$13,163.43. Although there are records of at least some of the payments Malino made on TCL’s
mortgage, there is nothing on the record to show how the payments on TCL’s mortgage and on
the Bluestone Land Contract affected the balance owed on the 2002 Land Contract itself, or how
the payments were allocated to interest and principal. While plaintiffs may be able to
demonstrate that Malino has not met its obligations under the contract, they failed to show it
based on the evidence provided. Indeed, the statement on which plaintiffs rely appears to be
nothing more than recognition by the parties that the 2002 Land Contract will result in a “balloon
payment” of the unpaid principal at the end of the three-year term because $7,000 per month
over 36 months would not pay off the loan balance. This interpretation is consistent with
“Additional Clause” (v) which states:
Seller is under no obligation to extend this contract beyond the agreed upon
termination or to refinance the principal balance beyond said termination date.
Because plaintiffs failed to support their position with documentary evidence, the trial court
erred in granting their motion for summary disposition.8
Finally, we find that Malino has abandoned its argument regarding credit of the
Transnation settlement by including it in the questions presented but failing to address the issue
within its brief or to provide any authority. Houghton v Keller, 256 Mich App 336, 339-340; 662
NW2d 854 (2003). We also note that plaintiffs’ suggestion that Malino has “unclean hands” is
inapposite because Malino is the defendant in this action and plaintiffs brought the motion for
summary disposition. See Richards v Tibaldi, 272 Mich App 522, 537; 726 NW2d 770 (2006).
We reverse the trial court’s grant of summary disposition and remand for further
proceedings consistent with this opinion. We do not retain jurisdiction.
/s/ William C. Whitbeck
/s/ Peter D. O’Connell
/s/ Kirsten Frank Kelly
8
As a result, we need not address Malino’s appeal regarding the issue of damages.
-7-
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