LOFTS ON THE NINE LLC V KEVIN AKEY
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STATE OF MICHIGAN
COURT OF APPEALS
LOFTS ON THE NINE, LLC,
UNPUBLISHED
February 10, 2011
Plaintiff-Appellant,
v
No. 294825
Oakland Circuit Court
LC No. 2009-102996-CK
KEVIN AKEY,
Defendant-Appellee.
LOFTS ON THE NINE, LLC,
Plaintiff-Appellant,
v
No. 295977
Oakland Circuit Court
LC No. 2009-101063-CK
JAMES FLOWERS,
Defendant-Appellee.
Before: WHITBECK, P.J., and O’CONNELL and WILDER, JJ.
PER CURIAM.
In this consolidated appeal, plaintiff Lofts on the Nine, L.L.C. appeals as of right the trial
court’s orders granting summary disposition for each of the defendants, Kevin Akey and James
Flowers. In each case, both arising out of condominium sales contracts between Lofts on the
Nine and defendants, the trial court found that the contracts were unenforceable on the ground
that Lofts on the Nine was not a licensed residential builder. We affirm.
I. FACTS
Lofts on the Nine is the owner of a multi-story, mid-rise building constructed on Nine
Mile Road in the City of Ferndale. The first floor of the project is devoted to commercial use for
lease by retail businesses. The remainder of the building contains 36 residential condominium
units available for purchase. Ronnisch Construction, a Michigan licensed residential builder,
began construction on the project in mid-2007. Lofts on the Nine hired Ronnisch Construction
to work on the project pursuant to a building contract executed in May 2007. In the contract,
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Lofts on the Nine is identified as the “owner,” Ronnisch Construction is identified as the
“contractor,” and AZD Associates is identified as the project “architect.”
After receiving the project plans from AZD Associates, Ronnisch Construction obtained
a building permit from the city of Ferndale. Under the terms of the building contract, Ronnisch
provided all of the labor and materials necessary to build the project and performed the
construction on the project.
In April 2007, Akey, one of the principle owners of AZD Associates, entered into a
Residential Construction Contract and Purchase Agreement with Lofts on the Nine for the
purchase of a condominium unit. In May 2008, Flowers entered into a separate Residential
Construction Contract and Purchase Agreement with Lofts on the Nine for the purchase a
condominium unit.
It is undisputed that both Akey’s and Flowers’ transactions used the same standard
contract form that Lofts on the Nine used for all of its condominium sales in the building. In
both contracts, Lofts on the Nine is identified as the “Builder/Developer.” Thus, pursuant to the
plain terms of the contract, Lofts on the Nine, as the builder/developer, was responsible for
construction of the condo units: “Builder/Developer shall construct the [condominium] . . . .”
Both Akey’s and Flowers’ condominiums were sufficiently complete in May 2009 to
allow the parties to proceed with the closing of the purchase transactions. However, in April
2009, Flowers had notified Lofts on the Nine that he would not be closing on the condominium
purchase. Similarly, in June 2009, after Lofts on the Nine had notified Akey that the
condominium was ready for closing, Akey notified Lofts on the Nine that he would not be
closing on his condominium purchase.
Lofts on the Nine commenced two separate actions in August 2009, to obtain specific
performance of Akey’s and Flowers’ respective contract obligations.
Akey moved for summary disposition, arguing that Lofts on the Nine was statutorily
barred from bringing its complaint because it did not have a residential builders license. That is,
Akey argued that, as an unlicensed residential builder, Lofts on the Nine was statutorily
prohibited from maintaining an action for compensation for work performed while unlicensed.
And Akey argued that, because Lofts on the Nine was unlicensed, the purchase agreement was
void and unenforceable.
Lofts on the Nine responded, arguing that, despite the language in the purchase
agreement identifying Lofts on the Nine as the “Builder/Developer,” Lofts on the Nine was not,
and was never intended to be, the party responsible for the actual construction of the project.
And indeed, Lofts on the Nine never did perform any construction on the project; as stated,
Ronnisch Construction, a licensed residential builder, secured the building permit and performed
the construction. Lofts on the Nine pointed out that Akey knew this when he entered into the
purchase agreement. Indeed, as stated, as architect on the condominium project, Akey, through
AZD Associates, provided Ronnisch Construction with the plans for construction. Lofts on the
Nine contended that the agreement with Akey was in substantial compliance with the law
because it contracted with a licensed residential builder to perform the construction.
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After hearing oral arguments on the motion, the trial court found, without elaboration,
that it was bound by this Court’s decision in Bernard F Hoste, Inc v Kortz.1 Accordingly, the
trial court granted Akey’s motion for summary disposition in October 2009. Lofts on the Nine
appealed to this Court shortly thereafter.
Flowers then moved for summary disposition, arguing that, like Akey, his purchase
contract was void and unenforceable because Lofts on the Nine did not have a residential
builders license. The trial court found that there was no latent ambiguity in the purchase contract
and that, therefore, the parole evidence rule limited the court’s review to interpreting the contract
on its face. The trial court thus found that Lofts on the Nine was the responsible contracting
party and, as such, it was required to be a licensed residential builder. The trial court granted
Flowers’ motion for summary disposition in January 2010. Lofts on the Nine appealed to this
Court shortly thereafter.
In this consolidated appeal, we now consider Lofts on the Nine’s appeals from the two
lower court actions.
II. SUMMARY DISPOSITION
A. STANDARD OF REVIEW
Under MCR 2.116(C)(10), a party may move for dismissal of a claim on the ground that
there is no genuine issue with respect to any material fact and the moving party is entitled to
judgment as a matter of law. It is not sufficient for the parties to promise to offer factual support
for their claims at trial.2 The moving party must specifically identify the undisputed factual
issues and support his or her position with documentary evidence.3 The nonmoving party then
has the burden to produce admissible evidence to establish disputed facts.4 The trial court must
consider all the documentary evidence in the light most favorable to the nonmoving party.5
“‘[T]he court is not permitted to assess credibility, or to determine facts on a motion for
summary judgment.’”6
This Court reviews de novo the trial court’s ruling on a motion for summary disposition.7
If a contract’s language is clear, its construction is a question of law that is subject to this Court’s
1
Bernard F Hoste, Inc v Kortz, 117 Mich App 448; 324 NW2d 46 (1982).
2
Maiden v Rozwood, 461 Mich 109, 121; 597 NW2d 817 (1999); PT Today, Inc v Comm’r of the
Office of Fin & Ins Servs, 270 Mich App 110, 150; 715 NW2d 398 (2006).
3
MCR 2.116(G)(3)(b) and (4); Maiden, 461 Mich at 120.
4
Wheeler v Charter Twp of Shelby, 265 Mich App 657, 663; 697 NW2d 180 (2005).
5
MCR 2.116(G)(5); Maiden, 461 Mich at 120.
6
Oade v Jackson Nat’l Life Ins Co, 465 Mich 244, 265; 632 NW2d 126 (2001), quoting Skinner
v Square D Co, 445 Mich 153, 161; 516 NW2d 475 (1994).
7
Roberts v Titan Ins Co, 282 Mich App 339, 348; 764 NW2d 304 (2009).
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de novo review.8 Further, the proper interpretation of a statute is a question of law that is subject
to this Court’s de novo review.9
B. LEGAL STANDARDS
The Occupational Code defines the term “residential builder” as follows:
a person engaged in the construction of a residential structure or a combination
residential and commercial structure who, for . . . compensation . . . undertakes
with another or offers to undertake or purports to have the capacity to undertake
with another for the erection, [or] construction . . . of, a residential structure or
combination residential and commercial structure; . . . or a person who erects a
residential structure or combination residential and commercial structure except
for the person’s own use and occupancy on the person’s property.[10]
And § 2412(1) of the Occupational Code states:
A person or qualifying officer for a corporation or member of a residential builder
or residential maintenance and alteration contractor shall not bring or maintain an
action in a court of this state for the collection of compensation for the
performance of an act or contract for which a license is required by this article
without alleging and proving that the person was licensed under this article during
the performance of the act or contract.[11]
Thus, “[u]nder the statute, a builder may not bring an action for collection of compensation
unless it can prove that it possesses the license ‘required by this article.’”12 “The effect of this
provision is to preclude noncomplying contractors from recovering on their residential building
or alteration contracts even where the contract has been complied with in all respects, thereby in
some instances bestowing a substantial windfall to the party claiming the defense.”13 And “[t]he
courts of this state have consistently upheld this harsh penalty for noncompliance[.]”14
8
Archambo v Lawyers Title Ins Corp, 466 Mich 402, 408; 646 NW2d 170 (2002).
9
Putkamer v Transamerica Ins Corp of America, 454 Mich 626, 631; 563 NW2d 683 (1997).
10
MCL 339.240l(a).
11
MCL 339.2412(1).
12
Stokes v Millen Roofing Co, 466 Mich 660, 664; 649 NW2d 371 (2002).
13
Robert H Pastor Bldg & Real Estate Dev Co v Cole, 127 Mich App 168, 172; 339 NW2d 11
(1983).
14
Id.
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C. ANALYSIS
We note that, despite its stated reliance on Bernard F Hoste, Inc v Kortz, the trial court
may have misspoken and actually meant to rely on this Court’s decision in Brummel v Whelpley,
which was presented during the lower court proceedings and, in fact, is dispositive in this case.15
In Brummel, the plaintiff was a licensed real estate broker who owned a vacant lot.16 The
plaintiff negotiated to sell the lot to the defendants and to then build a house on the lot for
them.17 But because the plaintiff himself was not a licensed builder, he hired a licensed builder
to construct the house.18 After the builder completed construction of the house, a dispute arose
between the plaintiff and the defendants over the workmanship.19 Therefore, the defendants
refused to complete the transaction or pay the plaintiff the balance owing on the house.20 The
plaintiff then sued for specific performance of the contract or, in the alternative, for damages.21
The defendants moved for a summary disposition, contending that the plaintiff was not a
licensed residential builder as required under MCL 338.1501 et seq. (subsequently repealed and
replaced by MCL 339.2401 et seq.).22
In reaching its holding, this Court first noted that there were no Michigan cases that dealt
with the issue at hand; thus, this Court found it helpful to look to interpretation of a similar
Arizona statute. In doing so, this Court found significant the Arizona Court of Appeals decision
in Miller v Pima County Superior Court.23
In Miller, the Arizona Court dealt with the question whether “a subdivider-owner of real
property who hires a licensed contractor to construct dwellings in a subdivision owned by him
and who contracts with members of the general public for the sale of such dwellings [is] required
to be licensed as a contractor[.]”24 The purchasers argued that the subdivider-owner, as signatory
to the construction contract, was a “contractor” within the meaning of the state statute, as
“a person, firm, partnership, corporation, association or other organization . . .
who, for . . . compensation other than actual wages, undertakes to or offers to
15
Brummel v Whelpley, 46 Mich App 93; 207 NW2d 399 (1973).
16
Id. at 95.
17
Id.
18
Id.
19
Id. at 94.
20
Id.
21
Id.
22
Id.
23
Miller v Pima County Superior Court, 446 P2d 699 (Ariz App, 1968).
24
Id. at 700.
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undertake to, or purports to have the capacity to undertake to, or submits a bid to,
or does himself or by or through others, construct . . . any building . . . or other
structure, project, development or improvement, or to do any part thereof[.]”[25]
Similar to Loft on the Nine’s argument herein, the subdivider-owner contended that he was not a
contractor, but “rather a person engaged in the sale of real estate, who although agreeing that a
structure would be built upon [the] parcel . . . , did not agree to personally construct the
structure[.]”26 The Miller Court, however, was not persuaded by the subdivider-owner’s
argument. Instead, it held:
We are of the opinion that under the facts of this case, the owner-subdivider
comes within the definition of “contractor” set forth above. The contract does not
purport to include “the performance of acts by a licensed contractor.” The
“undertaking” as to construction of the condominium villa was the subdivider’s,
i.e., he was the only one to whom the buyer, under the contract, could look for
performance.[27]
Relying on the above rationale from Miller, the Brummel Court reasoned that, as
signatory to the contract, the plaintiff-real estate broker was the only person to whom the
defendants could look for performance.28 Therefore, this Court held that the contract was void
and unenforceable.29
Here, like the real estate broker in Brummel and the subdivider-owner in Miller, Lofts on
the Nine contracted with Akey and Flowers as the “Builder/Developer” of the condominium
project and, as such, agreed to be responsible for construction of the condo units. Like the
contract in Miller, the Residential Construction Contract and Purchase Agreement here did not
purport to include the performance of a third-party licensed contractor. Thus, the undertaking30
of the construction of the condominiums was Lofts on the Nine’s. As in Brummel, Lofts on the
Nine “was the only one to whom the buyer, under the contract, could look for performance.”31
25
Id. at 701, quoting ARS 32-1101 (emphasis by Miller).
26
Id.
27
Id.
28
Brummel, 46 Mich App at 96.
29
Id.
30
See MCL 339.240l(a) (defining a “residential builder” as “a person engaged in the
construction of a residential structure or a combination residential and commercial structure who,
for . . . compensation . . . undertakes with another or offers to undertake or purports to have the
capacity to undertake with another for the erection, [or] construction . . . of, a residential
structure or combination residential and commercial structure[.]”)
31
Brummel, 46 Mich App 96.
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Accordingly, we conclude that the trial court properly granted summary disposition to
Akey and Flowers in each of the lower court actions.
We affirm.
/s/ William C. Whitbeck
/s/ Peter D. O'Connell
/s/ Kurtis T. Wilder
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