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S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S

CARO TRANS OPPORTUNITIES LLC,

Plaintiff-Appellant,

UNPUBLISHED

June 14, 2018

v No. 337074

Tuscola Circuit Court

MOBILE MEDICAL RESPONSE, INC., LC No. 15-029087-CK

Defendant-Appellee.

Before: GLEICHER, P.J., and BOONSTRA and TUKEL, JJ.

GLEICHER, J. (dissenting).

Two parties signed a lease. Each maintains that the other breached a provision of the 

lease. Both sought summary disposition, insisting that the other committed the first breach. The 

majority holds that one party, plaintiff Caro Trans Opportunities LLC, breached first because its 

conduct “obstructed, interfered with, and substantially failed to provide . . . the beneficial use of 

the leasehold.” This conclusion incorporates two intrinsically factual determinations: that Caro 

Trans committed the initial transgression and that its breach qualified as substantial. Finding 

facts is forbidden in summary disposition analysis. Because this case is replete with genuine 

issues of material fact, I respectfully dissent.

I

Caro Trans agreed to build out premises for Mobile Medical Response, Inc. (MMR) to 

use as an ambulance facility. As consideration for the build-out, Caro Trans agreed to rent the 

premises to MMR for five years at a base rate of $2,822.67 per month. “As additional 

consideration,” the 2015 lease provides, MMR “is conveying by warranty deed” a separate piece 

of property on Caro Road. The conveyance resulted in a rent credit of $1,083.33 per month, 

lowering the monthly base rent to $1,739.34. The specific language of this provision states:

5b. MMR Rent Credit. As additional consideration for this lease agreement, 

Tenant is conveying by warranty deed, property located at 1162 N. Caro Rd, 

Caro, MI (“Conveyed Property”) to Landlord. The parties agree that the 

Conveyed Property is deemed to have a fair market value of $65,000 and that 

Tenant shall receive a rent credit of $1,083.33 per month during the term of the 

lease until the credit has been fully expended after 60 months. In the event of a 

default, abandonment or termination of the lease by Tenant, there will be no 

cash value rebated to Tenant for any unused portion of the rent credit.
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Closing costs for revenue stamps/transfer taxes and title insurance policy in the 

name of Landlord shall be paid by Tenant. [Emphasis added.]

Paragraph 14 of the lease provides, “The Tenant’s execution of this Lease shall constitute an 

acknowledgement by Tenant that the Premises are then in acceptable condition.”1

The parties agree that MMR moved in on a date “early in August.” Before moving in, 

MMR did not convey the Caro Road property. Nor did it convey the property after embarking 

on its tenancy. On August 28, 2015, the Tuscola County building inspector issued a certificate 

of occupancy for the premises. He agreed at his deposition that on that date, the premises were 

“good to go and it could be occupied.” MMR paid the first month’s rent on September 11, 2015, 

and deducted the rent credit for the Caro Road property. But it still did not convey the Caro 

Road property. 

Before the certificate of occupancy was issued but after MMR had moved in, MMR 

began to complain about defects on the premises—a leaky roof, a defective garage door, faulty 

breakers, a leaky water heater line, and improper septic system drainage. Ultimately these 

complaints and others led the building inspector to revoke the certificate of occupancy on 

September 15. By then, MMR had occupied the premises for approximately six weeks.

Caro Trans made repairs to the building and the inspector reissued the certificate of 

occupancy two weeks later, on October 1, 2015. MMR did not move back into the building and 

did not transfer the Caro Road property. Instead, it unilaterally rescinded the lease.

Caro Trans filed this action asserting breach of contract and equitable claims. Following 

discovery, both parties moved for summary disposition, claiming the other had committed the 

first breach. The circuit court found that Caro Trans had materially breached the lease and had 

“unclean hands,” thereby barring it from enforcing the provision of the lease requiring a transfer 

of the Caro Road property.

II

According to the majority, Caro Trans committed the first breach of the lease, which 

justified MMR’s rescission and its unilateral termination of its contractual obligations. In 

reaching this conclusion, the majority specifically acknowledges—and relies on—two legal 

 1 This case arises from the 2015 lease, not the 2014 lease. The majority finds significance in the 

fact that the 2014 lease contained the same paragraph, but Caro Trans never sued to enforce it. 

The parties mutually decided that Caro Trans would build out and rent a different structure. The 

majority has not explained why Caro Trans’ decision to forbear legal enforcement of a provision 

in a contract that the parties agreeably invalidated has any relevance. I know of no legal 

principle equating forbearance from suit under one contract with a waiver of a subsequent breach

under another, and the majority has not proposed one. And in any case, our Supreme Court has 

firmly rejected such a notion: “Mere forbearance does not of itself constitute a waiver.” Singer v 

Hoffman Cake Co, 281 Mich 371, 374; 275 NW 177 (1937).
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principles: (1) unless a time is stated in the contract, a reasonable time for performance is 

implied, and (2) a party’s substantial breach of a contractual obligation may warrant rescission. 

Both principles guide an analysis of “who breached first,” the central question in this case. Both 

turn on factual determinations that must be made by a jury, and not on summary disposition.

2

The first principle governs our interpretation of the lease paragraph concerning transfer of 

the Caro Road property—“As additional consideration for this lease agreement, Tenant is 

conveying by warranty deed, property located at 1162 N. Caro Rd, Caro, MI . . . to Landlord.” 

The parties dispute whether this language required MMR to transfer the property at the time the 

lease was signed, or at some later point. The majority correctly recites that when a contract is 

silent as to the time of a term’s performance, the law presumes that the parties intended a 

reasonable time. This bedrock principle of contract law is well established in Michigan’s 

jurisprudence. Our Supreme Court first acknowledged it in 1863: “And when no time is 

specified for the performance of such act or contract in the agreement itself, the law steps in and 

requires it to be performed within a reasonable time.” Byram v Gordon, 11 Mich 531, 534-535 

(1863). Almost 100 years later, the Supreme Court reaffirmed the principle: “[W]hen a contract 

is silent as to time of performance or payment, absent any expression of a contrary intent, the law 

will presume a reasonable time.” Duke v Miller, 355 Mich 540, 543; 94 NW2d 819 (1959).

Equally well established is that determining a “reasonable time” inherently involves 

finding facts. As a general proposition, the “reasonableness” of a party’s conduct presents a jury 

question. That principal governs “reasonable time” judgments in contract cases. Justice 

Campbell highlighted the factually intense nature of the inquiry in 1868:

When a contract is to be performed within a reasonable time, the law implies that 

the parties contract in view of all the pertinent facts that may be mutually known 

to them, and it requires them to exercise such reasonable diligence as under all 

then and subsequently existing circumstances might be fairly expected. When a 

court or jury is called upon to decide whether they have complied with what 

might have been reasonably expected, there must be proof of such facts as will 

show what ought to have been done. [Stange v Wilson, 17 Mich 342, 348 (1868).]

Nothing has changed in the interim. “What constitutes a ‘reasonable time’ under the terms and 

circumstances of a contract is a question of fact.” Walter Toebe & Co v Dep’t of State 

Highways, 144 Mich App 21, 31; 373 NW2d 233 (1985). See also Justice Young’s concurring 

opinion in Jackson v Green Estate, 484 Mich 209, 217; 771 NW2d 675 (2009), which involved, 

analogously, the time for repayment of a loan under a contract, also governed by a “reasonable 

time” standard: “Determining what constitutes a reasonable amount of time to request payment 

of a loan is necessarily a factual question properly decided by the jury.” Id. (emphasis added).

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 2 Both parties demanded a jury trial.

3 The majority mentions without further elucidation that both parties requested summary 

disposition, and that neither contends that a fact question exists. This means that when 

evaluating each motion, we construe the facts and reasonable inferences in the light most 
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The majority and I agree that MMR was required to transfer the Caro Road property to 

Caro Trans within a reasonable time after signing the lease. But how much time was reasonable? 

Should the transfer have occurred on signing? The word “is” in the conveyance sentence would 

seem to point in that direction. Or does that sentence mean that the transfer was to occur at the 

moment of initial occupancy? Perhaps a reasonable time was when MMR made its first 

discounted rent payment. MMR’s deduction of the rent credit supports an argument that the land 

transfer should have been made by then, at the latest. The point is that the timing of MMR’s 

duty to transfer the property revolves around the concept of reasonableness, and reasonableness 

determinations are inherently fact specific. Here, the facts suggest several points in time at 

which the property transfer would have been reasonable.

The majority denies that it has engaged in fact-finding, claiming that “plaintiff presented 

no evidence that would allow reasonable minds to differ about whether defendant was required 

to convey the property before plaintiff’s breach.” But summary disposition is appropriate only 

when the evidence is so one-sided that the moving party must prevail as a matter of law. This is 

far from such a case. Viewed in the light most favorable to Caro Trans, it conveyed habitable 

premises that MMR occupied for six weeks, paying a reduced rental price for property that it 

failed to transfer. Sometime during those six weeks, I suggest, it would have been reasonable for 

MMR to convey the warranty deed, as it had promised to do in exchange “for the lease 

agreement.” The majority ignores this rational view of the evidence. Its decision inherently and 

improperly encapsulates findings of fact that (1) Caro materially breached the contract, despite 

the certificate of occupancy that had been issued before MMR took possession, (2) the breach 

was material, despite that the conditions were rectified in short order, and (3) Caro’s breach 

occurred before the “reasonable time” afforded MMR for performance. The majority’s 

unwillingness to own up to its fact-finding does not erase the portions of the record the majority 

finds inconvenient. Determining a reasonable time for MMR’s performance under the lease is 

 

favorable to the nonmoving party, crediting that party’s evidence without weighing it. This is 

not a semantic exercise, but a key component of our role. Had the parties truly agreed that no 

fact questions existed, they would have so stipulated. MCR 2.116(A). See also BF Goodrich Co 

v US Filter Corp, 245 F3d 587, 593 (CA 6, 2001):

It was not necessary for the district court to resolve the case at summary judgment 

solely because the parties filed cross-motions for summary judgment and 

presented a Joint Statement of Undisputed Material Facts. When parties file 

cross-motions for summary judgment, “the making of such inherently 

contradictory claims does not constitute an agreement that if one is rejected the 

other is necessarily justified or that the losing party waives judicial consideration 

and determination whether genuine issues of material fact exist.” 10A [Wright, 

Miller & Kane, Federal Practice & Procedure, § 2720 (3d ed, 1998).] A trial 

court may conclude, when reviewing the undisputed material facts agreed upon by 

the parties and drawing all inferences, in turn, for the non-moving party, that a 

genuine issue exists as to those material facts, in which case the court is not 

permitted to resolve the matter, but rather, must allow the case to proceed to trial.
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critical to the rest of the case, because MMR’s defense rests on the argument that Caro Trans 

breached first. In other words, MMR excuses its failure to abide by paragraph 5b of the lease on 

the ground that Caro Trans’s initial breach excused MMR’s nonperformance.

Sitting as jurors, the majority finds that Caro Trans committed the first breach, positing,

“The evidence presented to the trial court established that upon taking possession of the property, 

[MMR] discovered serious defects, including roof leaks, electrical hazards, and a malfunctioning 

toilet and septic system.” I respectfully disagree that the evidence “established” this proposition, 

or that these defects were substantial as a matter of law. The record facts conflict regarding

when MMR discovered the defects and whether those defects rendered further performance 

under the lease impossible. And whether the existence of the defects preceded a “reasonable 

time” for transfer of the Caro Road property is a material and disputed fact. 

The “first substantial breach” rule provides, “He who commits the first substantial breach 

of a contract cannot maintain an action against the other contracting party for a subsequent 

failure on his part to perform.” McCarty v Mercury Metalcraft Co, 372 Mich 567, 573; 127 

NW2d 340 (1964) (quotation marks and citation omitted). A “substantial breach” is one that 

“effect[s] such a change in essential operative elements of the contract that further performance 

by the other party is thereby ineffective or impossible, such as the causing of a complete failure 

of consideration or the prevention of further performance by the other party.” Id. at 574 

(citations omitted). But a partial failure to comply with the terms of a contract is not necessarily 

a substantial breach. Rosenthal v Triangle Dev Co, 261 Mich 462, 463; 246 NW 182 (1933). 

And whether a substantial breach changes the “essential operative elements of the contract” 

thereby making performance impossible is question for a fact-finder. Baith v Knapp-Stiles, Inc, 

380 Mich 119, 126-127; 156 NW2d 575 (1968) (quotation marks and citation omitted). The 

federal Court of Appeals for the Sixth Circuit has observed, “Michigan case law indicates that 

the determination of which breaches are ‘substantial’ is inextricably tied to the particular facts of 

the case.” Chrysler Int’l Corp v Cherokee Export Co, 134 F3d 738, 742 (CA 6, 1998).

Did Caro Trans substantially breach the lease? Answering this question requires factfinding. As a starting point, the record conflicts as to whether the defects MMR claimed were 

actually substantial. Given that the defects were rapidly repaired and a new certificate of 

occupancy issued within two weeks after MMR moved out, it is at least arguable that the defects 

were not substantial. Certainly Caro Trans has the right to argue to a jury that the defects 

identified by MMR did not render MMR’s performance under the contract “ineffective or 

impossible.” McCarty, 372 Mich at 574. Although the majority claims that “upon taking 

possession of the premises” MMR discovered significant defects rendering the building 

uninhabitable, the record simply does not support his claim. The first certificate of occupancy 

was issued on August 28, at least two weeks after MMR moved in. Two weeks after that, MMR 

made a rent payment. These facts establish a material question as to when Caro Trans 

breached—on delivery of the premises, or later, by failing to timely repair once defects were 

brought to its attention. The same facts give rise to an inference (and therefore a material 

question) regarding whether the defects were substantial. 

And what about the lease provision stating, “The Tenant’s execution of this Lease shall 

constitute an acknowledgement by Tenant that the Premises are then in acceptable condition”? 

Does the fact that MMR signed the lease mean that when it took possession, the premises were in 
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habitable condition? If so, the breach that followed involved a failure to repair. In that 

circumstance, the law assumes that the lessor would have a reasonable time to remedy any 

defects. See Karpp v Royer, 362 Mich 64, 68; 106 NW2d 244 (1960). 

Whether the lease was breached, by whom and when, are subject to reasonable debate in 

this case. “[I]f reasonable minds could disagree about the conclusions to be drawn from the 

facts, a question for the factfinder exists.” Henderson v State Farm Fire & Cas Co, 460 Mich 

348, 353; 596 NW2d 190 (1999). A judge evaluating summary disposition is not “to weigh the 

evidence and determine the truth of the matter but to determine whether there is a genuine issue 

for trial.” Anderson v Liberty Lobby, Inc, 477 US 242, 249; 106 S Ct 2505; 92 L Ed 2d 202 

(1986). In deciding which breaches could have been remedied and which could not, and in 

determining whether a breach was substantial, the majority has usurped the fact-finder’s role. I 

would reverse and remand for a trial.

/s/ Elizabeth L. Gleicher