### Court of Appeals, State of Michigan

ORDER

Stonecrest Building Comp any v Chicago T i tle I n s uran ce Company

Docket No. 3 19841 / 3 19842

LC No. 2008

- 001055 CH Amy Rona y ne Krause
Pre si din g Jud ge

Kir st en Frank Kelly

Dougla s B. Shapiro

Jud ges

The Court orders that the mo t ion for rec o n si deration i s GRANTED, and thi s Court's opinion issued Ap ril 7

, 2015 i s he r eb y VACATED. A n ew opinion i s attached to this order.

Kelly

, K. F., J., would deny the motion for reco n s i d era tion.

A true co py e nter ed and ce rti fied by J ero m e W. Z imm e r Jr.

, Chief C l e rk

, on



# JUL 2

. 1 

# 2015

Date-1- 

### STATE OF MICHIGAN

COURT OF APPEALS

STONECREST BUILDING COMPANY,

and

RICHARD J. SABLE,

Plaintiffs-Appellees, UNPUBLISHED July 21, 2015

v No. 319841 Macomb Circuit Court CHICAGO TITLE INSURANCE COMPANY, LC No. 2008-001055-CH

Defendant-Appellant.

CHICAGO TITLE INSURANCE COMPANY,

Plaintiff-Appellant,

v No. 319842 Macomb Circuit Court STONECREST BUILDING COMPANY,

and

RICHARD J. SABLE, LC No. 2008-002153-CH

Defendants-Appellees.

ON RECONSIDERATION

Before: R ONAYNE K RAUSE , P.J., and K. F. K ELLY and S HAPIRO , JJ.

P ER C URIAM

.-2- In these consolidated appeals, 1 Stonecrest Building Company (Stonecrest) and its president, Richard J. Sable, and Chicago Title Insurance Compan y (CTIC) appeal by right from the trial court orders that inte rpreted a personal guaranty ent ered into by the parties arising from several construction projects. W e affirm in part and reverse a nd remand in part.

This case arises out of constr uction projects and contracts be tween Stonecrest and Stock Building Supply Company (Stock). Stonecrest was engaged in bui lding several residential condominium projects. Stock contracted to furnish labor and ma terials for the project. This arrangement was evidenced by a Sales Agreement, entered into by Stonecrest and Stock on December 3, 2003. The Sales Agreement explicitly provided that Sable assumed no personal liability for sums due under the Sales Agreement.

In 2006 and 2007, Stonecrest began experiencing financial diff iculties such that it was unable to meet its obligations to Stock and other contractors. Accordingly, on July 30, 2007, Sable executed the personal guaranty (Guaranty) that is the mai n subject of the instant litigation. The guaranty provides in relevant part:

The undersigned, RICHARD J. SABLE, (“Guarantor”), in order to induce STOCK BUILDING SUPPLY, LLC, a Delaware limited liability compan y, (“Stock”), to extend credit to STONECREST BUILDING COMPANY, a Michigan corporation (“Stonecrest”), to accept a promissory not e in the sum of Thirty Nine Thousand Two Hundred Four and 00/100 ($39,204.00) D ollars, and to forbear from commencing suit, does hereby unconditionally an d absolutely guarantee to Stock, its successors and assigns, the full and pr ompt payment, when due, or all sums payable by Ston ecrest to Stock pursuant to (a) the Promissory Note of even date executed and delivered by Stonecrest to Stock in the foregoing principal amount (the “Note”), an d (b) the Sales Agreement date d December 3, 2003 between Stonecrest and Stoc k (the “Sales Agreement”).

On the same date, the parties executed the referenced promissor y note (Promissory Note) in the amount of $39,204.00.

In March 2008, Stock filed suit against Stonecrest and Sable f or breach of contract under the Sales Agreement and the Guaranty. Also in March 2008, Ston ecrest and Sable filed a separate lawsuit against Stock f or declaratory relief seeking, among other things, a declaration that under the Guaranty, Sable was liable for only the Promisso ry Note and sums due under the Sales Agreement accruing after July 30, 2007. While these case s were not formally consolidated before the trial court, they wer e litigated together and were c onsolidated on appeal before this Court.

CTIC became involved in this litigation on behalf of homeowner s who were sued as a result of Sable and Stonecrest’ s failure to pay contractors, su bcontractors, suppliers, and laborers.

1 Stonecrest Bldg Co v Chicago Title Ins Co , unpublished order of the Court of Appeals, entered January 15, 2014 (Docket Nos. 319841 & 319842).-3- CTIC reached a settlement on behalf of its insureds with variou s lien claimants. As part of its settlement with Stock, CTIC was assigned all of Stock’s claims against Sable and Stonecrest.

On January 15, 2013, CTIC moved for summary disposition under MCR 2.116(C)(10), arguing that “Stonecrest materially breached the Sales Agreemen t by, among other things, failing to tender payment when due” and that, under the Guaranty, Sable was personally liable for this breach in the amount of $9,092,433.53. On August 13, 2013, the trial court issued a written opinion granting summary disposition in favor of CTIC in part, ruling that under the Guaranty, Sable was “only liable under the Guaranty for repayment of the July 30, 2007 Promissory Note and those sums accruing under the Sales Agreement on and after July 30, 2007.” Following a subsequent hearing on October 30, 2013, the court clarified its opinion, ruling that Sable’s liability “is limited to the sums for purchases from and after July 30, 2007 and interest and carrying charges to those obliga tions only[,]” i.e., that Sable was not personally liable for any obligations incurred prior to July 30, 2007.

After another hearing held December 19, 2013, the parties stip ulated to entry of a judgment in favor of CTIC and against Sable in the amount of $5 1,154.69 “for labor and materials provided from and after July 30, 2007, inclusive of t ime price differential accruing on labor and material provided from and after July 30, 2007, costs and attorneys’ fees.” This stipulation included language pro viding that: “The parties do n ot waive, and expressly reserve, any right they may have, to seek appellate review of the Orders except that the amount of labor and materials from and after July 30, 2007 and the time price d ifferential accruing on labor and materials provided from an a fter July 30, 2007 is not appealabl e nor subject to f urther review.”

CTIC argues that the clear and unambiguous language of the Gua ranty provides that Sable assumed personal liability for all sums owed by Stonecres t to Stock under the Sales Agreement, including all debts incurred prior to July 30, 2007. The trial court disagreed, essentially finding that the Gua ranty unambiguously provided th at Sable only assumed personal liability for the amounts that came due on or after July 30, 20 07. After conducting a review de novo, we conclude that the Guaranty is ambiguous and, according ly, reverse and remand. 2

2 This Court reviews de novo a tria l court’s grant of summary di sposition under MCR 2.116(C)(10). Ernsting v Ave Maria College , 274 Mich App 506, 509; 736 NW2d 574 (2007). “When deciding a motion for summary disposition under MCR 2.116 (C)(10), a court must consider the pleadings, affidavits, depositions, admissions, an d other documentary evidence submitted in the light most favorable to the nonmoving party.” Id . at 509-510. All reasonable inferences are to be drawn in favor of the nonmoving party. Dextrom v Wexford Co , 287 Mich App 406, 415; 789 NW2d 211 (2010). “ Summary disposition is pro per under MCR 2.116(C)(10) if the documentary evidence shows that there is no genuine issue regarding any material fact and the moving party is entitled to judgment as amatter of law.” Ernsting , 274 Mich App at 509. “This Court is liberal in finding genuine iss ues of material fact.” Jimkoski v Shupe , 282 Mich App 1, 5; 763 NW2d 1 (2008). “A genuine issue of ma terial fact exists when the record, giving the benefit of any reasonable doubt to the o pposing party, leaves open an issue upon which reasonable minds could differ.” Ernsting , 274 Mich App at 510. “The proper-4- “Contracts of guaranty are to b e construed like other contract s, and the intent of the parties, as collected from the whole instrument and the subject -matter to which it applies, is to govern.” Comerica Bank v Cohen , 291 Mich App 40, 46; 805 NW2d 544 (2010) (quotation marks and citation omitted). How ever, “a guarant y contract . . . is a special ki nd of contract” and must be strictly interpreted. Bandit Indus, Inc v Hobbs Int’l, Inc , 463 Mich 504, 512; 620 NW2d 531 (2001). Thus, “a court must approach with caution a claim that the parties have formed a guaranty contract.” Id . “[A]ssumption of another’s deb t is a substantial undertaking , and thus the courts will not assume such an obligation in the absence of a clearly expressed intention to do so.” Id

. Sable does not dispute the validity of the Guaranty nor his pe rsonal liability thereunder. That is, there is no question that the Guaranty is enforceable. There is similarly no question that Sable “clearly expressed” his intention to assume some personal liability under the Guaranty. Sable does not dispute that he was personally liable for the am ount of the Promissory Note and the sums due under the Sales Agreement accruing on and after Ju ly 30, 2007. He merely seeks affirmance of the trial court’s rulings. Thus, the question be fore us is whether Sable assumed personal liability for those de bts incurred under the Sales Agr eement prior to July 30, 2007.

In interpreting a contract, this Court’s obligation is to deter mine the intent of the parties. This Court must examine the language of the contract and accord the words their ordinary and plain m eanings, if such meanings are a pparent. If the contractual language is unambiguo us, courts must interpret and enforce the contract as written. Thus, an unambiguous contractual provisio n is reflective of the parties’ intent as a matter of law. [ In re Smith Trust , 274 Mich App at 285 (quotation marks and citations omitted).]

By contrast, “[a] contract is ambiguous if the language is susc eptible to two or more reasonable interpretations.” D’Avanzo v Wise & Marsac, PC , 223 Mich App 314, 319; 565 NW2d 915 (1997). In such a situation, summary disposition is inappropri ate because an ambiguity creates a question of fact, and this Court will remand for “factual devel opment [] necessary to ascertain the parties’ intent.” Id . at 320.

The parties each contend that the Guaranty unambiguously evide nces their advocated interpretation. CTIC’s argument is based primarily on the sent ence that reads that Sable “does hereby unconditionally and absolutely guarantee to Stock, its s uccessors and assigns, the full and prompt payment, when due, of all sums payable by Stonecrest to Stock pursuant to . . . the Sales Agreement . . . .” (Emphasis added). However, Sable argues th at the phrase “when due” unambiguously means that he was not providing a personal guaran ty for those sums that were already due when the document was signed. He therefore argues that nowher e in the Guaranty is it “clearly expressed” that he a greed to assume personal liabil ity for all sums owed by Stonecrest. Bandit Indus, Inc , 463 Mich at 512.

interpretation of a contract is a question of law that this Cou rt reviews de novo.” In re Smith Trust , 274 Mich App 283, 285; 731 NW2d 810 (2007).-5- We conclude, particularly in light of the special nature of a guaranty contract, that each party has presented a reasonable reading of the Guaranty. Thus , although each party asserts that its advocated reading is clear and unambiguous, we conclude tha t the document is ambiguous as to the scope of Sable’s personal liability; specifically, if th at liability extends to all sums owed or only those that came due on or after its July 30, 2007. Thus, the trial court’s grant of summary disposition was inappropriate, D’Avanzo , 223 Mich App at 319, and we remand for further proceedings on the issue, including the admission and considera tion of extrinsic evidence as
necessary, 3 see Zurich Ins Co v CCR & Co , 226 Mich App 599, 604; 576 NW2d 392 (1997).

Our finding of ambiguity extends to the question of whether Sa ble is a guarantor of the time-price differential (i.e., interest) accruing on the pre-Ju ly 30, 2007 debt. If he were found liable for the time-price differe ntial on the pre-July 30, 2007 debt but not the underlying principle, Sable could be liable in perpetuity for those time-p rice differential payments on a debt for which he was adjudged not liable. CTIC would likely have n o incentive to settle the underlying debt (indeed, Stonecres t ceases to exist as a busine ss) and, therefore, Sable could end his continuing liability only by paying off the underlying debt , an action which would render meaningless any finding that he did not guarantee it. See Rector v McCarty , 61 Ark 420; 33 SW 633 (1896). Notably, the Guaranty makes no mention of time-pri ce differential and does not further define “sums payable.” Accordingly, we conclude that t he Guaranty is ambiguous as to payment of the time-price differential on the pre-July 30, 2007 debt. If it is ultimately determined that Sable has guaranteed the pre-July 30, 2007 debt , then it follows that he has guaranteed the differential charges as well. However, if it is determined that Sable is not liable for that debt, then the trial court shall make a determination, based on the Guaranty and relevant extrinsic evidence, whether the Sable’s guarantee applies to th ose charges.

Sable also argues that the final judgment entered by the trial court operated to dismiss with prejudice any claims CTIC may have against Stonecrest unde r the Sales Agreement. We disagree. 4

The final judgment in this case was stipulated to by the parti es. MCR 2.504(A)(1)(b) provides that the “filing [of] a stipulation of dismissal signe d by all the parties” shall be without prejudice “[u]nless otherwise st ated in the notice of dismissal [.]” The final judgment in this case makes no reference to any claims against Stonecrest by CTIC bei ng dismissed with prejudice. Accordingly, to the extent those claims were dismissed, it was done without prejudice. This outcome is supported by reading the rest of the final judgment in context. The parties clearly

3 In light of our finding of ambi guity, we need not address the trial court’s additional ruling regarding consideration. Howev er, as adequate legal considerat ion in an element of a legally enforceable contract, Calhoun Co v Blue Cross Blue Shield of Mich , 297 Mich App 1, 13-14; 824 NW2d 202 (2012), neither party is precluded from challenging co nsideration in the proceedings on remand.

4 Both the interpretation of court rules, Al-Shimmari v Detroit Med Ctr , 477 Mich 280, 287; 731 NW2d 29 (2007), and a court order, Silberstein v Pro-Golf of America, Inc , 278 Mich App 446, 460; 750 NW2d 615 (2008), involve questi ons of law reviewed de novo.-6- intended that the stipulation only regard Sable’s personal liab ility for the Promissory Note and the sums incurred under the Sales Agreement on or after July 30 , 2007. The parties also expressly stipulated that all appeal rights were preserved exce pt as to those two issues, demonstrating their intent that the judgment did not foreclose, waive, or dismiss with prejudice any claims outside of those two limited damage issues.

In sum, we affirm the trial court order insofar as it held tha t Sable was personally liable for the amount of the Promissory Note and principle sums under the Sales Agreement that came due on or after July 30, 2007. We vacate the trial court’s ord er insofar as it found that Sable was not personally liable on the principle due prior to July 30, 20 07 or for the time-price differential charges on the pre-July 30, 2007 debt. As to those determinati ons, we remand to the trial court for further proceedings consis tent with this opinion. We do no t retain jurisdiction.

/s/ Amy Ronayne Krause /s/ Douglas B. Shapiro