UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CARE CONTINUUM, INC.

d/b/a SIGNATURE HOME CARE,

Plaintiff/

Counter-defendant,

Case No. 09-CV-10573 

vs. HON. GEORGE CARAM STEEH

THE GRAND COURT OF FARMINGTON HILLS,

BROOKDALE LIVING COMMUNITIES - GC, LLC, and

BROOKDALE LIVING COMMUNITIES OF MICHIGAN, INC.,

Defendants/

Counter-plaintiffs.

_____________________________/

BENCH TRIAL ORDER - PHASE I

This matter is before the court following an October 27, 2009 bench trial to

adjudicate the parties' rights under a June 10, 2008 "Resident Agreement" lease.

I. Background

Plaintiff Care Continuum, Inc. d/b/a Signature Home Care ("Signature") provides

home care personal services to senior citizens, including several past and existing

residents of defendant The Grand Court of Farmington Hills ("GCFH"), an independentliving retirement community located in Farmington Hills, Michigan. Defendants Brookdale

Living Communities - GC, L.L.C. and Brookdale Living Communities of Michigan participate

in the operation of GCFH. Signature contracted directly with GCFH residents while leasing

GCFH Apartment No. 602A under a June 10, 2008 "Resident Agreement." Signature also

operated under a written April 1, 2003 "Resident Access to Personal Care Services,

Service Agreement" ("Services Agreement") with GCFH, which has since been terminated.

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Signature filed a complaint in Michigan's Oakland County Circuit Court on February

5, 2009 alleging that, in December 2008, defendants "arranged for" ComForcare Senior

Services to provide competing personal care services to GCFH residents. Signature

alleges the defendants have made false statements to GCFH residents that Signature is

leaving GCFH and helping with the transition to ComForcare, that several Signature

employees will be joining ComForcare, and that Signature will no longer be occupying an

office at GCFH. Signature alleges these false statements caused their clients to become

fearful and cancel Signature personal services contracts. Signature alleges the defendants

wrongfully threatened to evict Signature from Apartment No. 602A notwithstanding

Signature's contractual authority and intention to renew the lease under the terms of the

Resident Agreement. Signature seeks declaratory and injunctive relief as GCFH's lessee.

Signature also alleges tortious interference with contract, and tortious interference with

business relations. Defendants removed the lawsuit to federal court on February 17, 2009

premised on diversity jurisdiction. 28 U.S.C. § 1331.

On March 3, 2009, defendants filed a counterclaim alleging the services Signature

provided to GCFH residents under the Services Agreement were deficient, requiring

Signature to submit a "Plan of Action" in March 2008 to address specific deficiencies.

Defendants allege Signature failed to implement the Plan, causing GCFH to notify

Signature on January 20, 2009 that the Services Agreement was being terminated for

cause due to Signature's breach. Defendants allege that Signature has since refused to

vacate Apartment No. 602A and share information with GCFH about residents' needs, and

has recommended to GCFH residents that they leave GCFH. Defendants allege that the

Resident Agreement leasing Apartment No. 602A to Signature terminated as a matter of

law with the termination of the Services Agreement. Defendants allege breach of the

Services Agreement, rescission of the Resident Agreement, the right to summary eviction,

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tortious interference with business relations, and tortious interference with contract.

On May 12, 2009, the court granted defendants' unopposed motion to bifurcate trial

and discovery into two phases, with Phase I adjudicating Signature's claim for declaratory

and injunctive relief as to the Resident Agreement, and defendants' counterclaims seeking

rescission of the Resident Agreement and the right to summary eviction. Phase II involves

adjudication of the remaining claims and counterclaims, as well as damages. The parties

agreed that Phase I would involve a non-jury trial. As scheduled, the Phase I non-jury trial

was held on October 27, 2009.

II. Phase I Non-Jury Trial

A. The Resident Agreement and Services Agreement

The Resident Agreement executed by the parties on June 10, 2008 reads in

pertinent part:

THE GRAND COURT agrees to provide the following facilities and service

for the RESIDENT [Signature Home Care], for the term of one year,

commencing 5/1/08 and ending 4/30/09 At the following described premises

located in the City of Farmington Hills, Oakland County, Michigan.

The Apartment Number 602A

THE GRAND COURT, Farmington Hills

36550 Grand River Ave.

Farmington Hills, Mi 48335

The RESIDENT covenants and agrees to pay THE GRAND COURT, without

demand, the monthly residency fee of 2132 - for the resident [sic] in advance

on or before the first day of every month. . . . . The above mentioned

premises shall be occupied as a private dwelling apartment by the Resident.

. . . .

* * *

12. The RESIDENT is hereby granted an option to renew this agreement

annually. The rental fee will increase beginning in the first of the month

following an anniversary date. Resident agrees to execute such renewal

thirty (30) days prior to the anniversary date. In the event resident does not

execute such renewal by the anniversary date, and the resident holds over

occupancy after the expiration of this lease, the monthly rental fee charged

will be the published rental rate in the current GRAND COURT brochures.

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13. In the event RESIDENT becomes (a) incapable of living independently,

as certified by a physician, (b) in the event of death, or (c) becomes eligible

to move into a rental unit in senior citizen housing subsidized by a local,

state, or federal program, RESIDENT may terminate this agreement of the

specific period by notifying THE GRAND COURT in writing at least 30 days

prior to vacating the apartment. The Grand Court, Farmington Hills reserves

the right to show the resident's apartment once notices [sic] has been given.

14. In the event Resident becomes ill or incapacitated to the point that they

cannot receive proper care in his own living quarters, or becomes mentally

or emotionally disturbed so as to be deemed detrimental to the health or

peace of the other Residents, the Executive Director, in his sole discretion

shall have the right to terminate this agreement upon 30 days written notice

to the resident and/or residents family member responsible for the residents

affairs. However, in the event residents [sic] function declines to the extent

of resident becomes a threat to himself or, other residents, staff members,

or any person, the Executive Director reserves the right to show the

apartment after the notice to vacate has been given to the resident.

* * *

16. THE GRAND COURT may terminate this agreement upon violation by

the Resident, the Resident's guests or the Resident's private duty employees

or any terms of this residency agreement or the residency guidelines.

The Services Agreement provides in pertinent part:

 This resident Access to PERSONAL CARE SERVICES, Services

Agreement (this "AGREEMENT") is made on the 1st day of April, 2003 (the

"Effective Date") by and between THE GRAND COURT OF FARMINGTON

HILLS and SIGNATURE HOME CARE ("SHC")

* * *

Section 1. Services and obligations of SHC

1.1 Services

(a) SHC shall establish and operate a Personal Care Services Program at the

FACILITY . . . .

(b) SHC shall make the SERVICES available to RESIDENTS and operate the

PERSONAL CARE SERVICES PROGRAM twenty-four (24) hours a day and

seven (7) days a week, inclusive of holidays.

* * *

Section 2. Services and Obligations of FACILITY. FACILITY shall: 

(a) make available space at the FACILITY, as reasonably necessary, to

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enable SHC to perform the services contemplated under this Agreement

provided that such space shall include, without limitation, that certain office

space at the FACILITY which is described on EXHIBIT B attached hereto[.]

Section 3. Term.

 The term of this Agreement shall continue on the Effective Date and

shall continue for a period of five (5) years (the "INITIAL TERM"). SHC may

elect to extend the INITIAL TERM of this Agreement for successive one year

periods (the "EXTENTION TERMS" [sic]) unless SEC shall give the

FACILITY written notice of it's [sic] election to not extend the Term at least

sixty (60) days prior to the expiration of the INITIAL TERM. The INITIAL

TERM and the EXTENSION TERM, if any, shall be herein referred to as the

("TERM").

* * *

Section 10. Events of Termination

10.1 Termination for Cause. This AGREEMENT may be terminated by either

party upon the occurrence of any one (1) of the following:

(a) A breach of this AGREEMENT by the other party provided that the

breaching party shall have been provided with notice and a thirty (30) day

cure period.

(b) If a party shall apply for or consent to the appointment of a receiver,

trustee or liquidator of itself or of all or a substantial part of its assets, file a

petition in bankruptcy, or admit in writing its inability to pay its debts as they

become due, make general assignments for the benefit of creditors, file a

petition or answer seeking reorganization or arrangement with creditors or

take advantage of any insolvency law, or if an order, judgment or decree

shall be entered by a court of competent jurisdiction or an application of a

creditor, adjudicating such party to be bankruptcy [sic] or insolvent, or

approving a petition seeking reorganization of such party or appointing a

receiver, trustee, or liquidator of such party or of all or a substantial part of its

assets, and such order, judgment, or decree shall continue in effect and

unstayed for a period of thirty (30) consecutive calendar days, then either of

the other parties may terminate this AGREEMENT upon ten (10) business

days' prior written notice to such party.

10.2 Immediate Termination. Notwithstanding anything to the contrary

contained herein, this AGREEMENT will be terminated upon the following

events: (a) the suspension or revocation of any license, certificate, or other

legal credentials necessary for SHC to provide any of the services covered

by this AGREEMENT; (b) the suspension revocation of any license,

certificate, or other legal credentials necessary for FACILITY to provide or

support any of the services covered by this AGREEMENT; and (c) failure by

either party to maintain the insurance required hereunder.

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10.2 Additional Termination Rights. FACILITY may terminate this

AGREEMENT, with cause, upon sixty (60) days prior written notice to SHC.

SHC may terminate this AGREEMENT, with cause, upon sixty (60) days prior

written notice to FACILITY.

* * *

13.8 Entire AGREEMENT/Amendment. This AGREEMENT constitutes the

entire AGREEMENT between the parties regarding the subject matter hereof,

and no representations, warranties, inducements, promises or agreements,

oral or written, between the parties not embodied in this agreement shall be

of any force or effect. This AGREEMENT may be amended upon mutual,

written agreement of the parties hereto.

(italics emphasis added). For purposes of the Phase I Non-Jury Trial only, the parties

agree that the defendants legitimately terminated the Services Agreement.

As it relates to the question of possessory rights, Signature argues that the Resident

Agreement stands on its own, independent of the Services Agreement. Signature asserts

that the parties did not intend that the Resident Agreement be incorporated as part of the

Services Agreement as "Exhibit B," referred to in Section 2(a) of the Services Agreement,

or that a termination of the Services Agreement would also terminate the Resident

Agreement. Signature maintains that the parties understood Signature would continue to

provide services to its clients at GCFH from Apartment No. 602A, under service contracts

to which the defendants were not a party. Signature asserts that it's option to annually

renew the Resident Agreement under paragraph 12 remains enforceable, and that it

renewed the lease of Apartment No. 602A by providing the defendants with timely notice

of renewal in March 2009.

Defendants argue that "Exhibit B" referred to in the Services Agreement is the

Resident Agreement, and that the two documents must be read together to discern the

parties' intent that Signature was entitled to lease Apartment No. 602A only as long as

Signature continued to provide residents with personal care services under the terms of the

Services Agreement. Defendants assert that the initial Resident Agreement and the

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Services Agreement were executed in reasonable temporal proximity, and therefore they

must be read together to discern the intent of the parties. Defendants further argue that

Signature executed the Resident Agreement only for GCFH's internal audit purposes, not

to lease Apartment No. 602A as a "resident" of GCFH. Defendants argue in the alternative

that GCFH breached the Resident Agreement by not occupying Apartment No. 602A "as

a private dwelling apartment."

B. Michigan Contract Law

The parties agree Michigan law is controlling in this diversity action. Accordingly,

the court applies the principles of Michigan contract law. See Wonderland Shopping

Center Venture Ltd. Partnership v. CDC Mortgage Capital, Inc., 274 F.3d 1085, 1092 (6th

Cir. 2001). A court's obligation in interpreting a written contract is to discern the contracting

parties' intent. Quality Products and Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362,

375, 666 N.W.2d 251 (2003) (citing Sobczak v. Kotwicki, 347 Mich. 242, 249, 79 N.W.2d

471 (1956)). This intent is to be determined in light of the surrounding circumstances and

from a reading of the instrument as a whole. Cleveland v. Detroit Trust Co., 264 Mich. 253,

257, 249 N.W.2d 842 (1933). If the contract language is clear and unambiguous, the

contract is construed as a matter of law and enforced as written unless contrary to public

policy. Quality Products, 469 Mich. at 375 (citing Farm Bureau Mut. Ins. Co. of Michigan

v. Nikkel, 460 Mich. 558, 570, 596 N.W.2d 915 (1999)); Port Huron Ed. Ass'n v. Port Huron

Area School Dist., 452 Mich. 309, 323, 550 N.W.2d 228 (1996) (citing Dykema v.

Muskegon Piston Ring Co., 348 Mich. 129, 138, 82 N.W.2d 467 (1957)).

Extrinsic evidence may be used "to dispose of a potential ambiguity, to prove the

existence of a potential ambiguity, or to indicate the actual intent of the parties where an

actual ambiguity exists." Wonderland Shopping, 274 F.3d at 1095 (citing Am. Anodco, Inc,

v. Reynolds Metals Co., 743 F.2d 417, 422 (6th Cir. 1984)). If the contract language

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remains unclear or susceptible to more than one meaning, contract interpretation becomes

a question of fact that must be decided by the fact-finder upon an examination of the

extrinsic evidence. Port Huron Ed. Ass'n, 452 Mich. at 323; Klapp v. United Insurance

Group Agency, Inc., 468 Mich. 459, 453-454, 663 N.W.2d 447 (2003). Extrinsic evidence

indicating the contemporaneous understanding of the parties is particularly helpful as "an

aid in construction of the disputed terms." Klapp, 468 Mich. at 469-70 (quoting Penzien v.

Dielectric Products Engineering Co., Inc., 374 Mich. 444, 449, 132 N.W.2d 130 (1965)).

Ultimately, in order to form a valid contract, there must be a meeting of the minds.

Heritage Broadcasting Co. v. Wilson Communications, Inc., 170 Mich. App. 812, 818, 428

N.W.2d 784 (1988) (citing Fisk v. Fisk, 328 Mich. 570, 574, 44 N.W.2d 184 (1950) and

Smith v. Neilan, 44 Mich. App. 394, 397, 205 N.W.2d 186 (1973)). "A meeting of the minds

is judged by an objective standard, looking to the express words of the parties and their

visible acts, not their subjective states of mind." Heritage Broadcasting, 170 Mich. App. at

818 (citing Siegel v. Spinney, 141 Mich. 346, 350, 367 N.W.2d 860 (1985)).

C. Analysis

The Resident Agreement and surrounding circumstances demonstrate that the

parties executed the Resident Agreement for the intended purpose of Signature rendering

personal care services to GCFH residents. Cleveland, 264 Mich. at 257. The Resident

Agreement contains enforceable terms demonstrating the parties intended that Signature

would lease Apartment No. 602A "for the term of one year, commencing 5/1/08 and ending

4/30/09." Id. The Resident Agreement also contains written provisions the parties clearly

did not intend to be enforceable, including: (1) Signature's promise to occupy Apartment

No. 602A as a "private dwelling apartment"; (2) GCFH's right to terminate the lease with

30 days notice if Signature became "incapable of living independently, as certified by a

physician," "in the event of death," or if Signature became "eligible to move into a rental unit

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in [subsidized] senior citizen housing"; and (3) GCFH's right to terminate the lease with 30

days notice if Signature became "ill or incapacitated to the point that they cannot receive

proper care in [their] own living quarters, or [became] mentally or emotionally disturbed so

as to be deemed detrimental to the health or peace of the other Residents." Id. 

Given the differences in circumstances between a senior citizen lessee and a

corporate lessee such as Signature, an ambiguity exists within the Resident Agreement

whether the parties intended that Signature would retain an indefinite "option to renew this

agreement annually." The Resident Agreement contemplated termination of the lease

based on potential physical characteristics of incapacity, illness, or death attributable to a

mortal senior citizen, not to a corporate entity. The Resident Agreement itself does not

contemplate circumstances for termination that might arise where the lessee is a corporate

entity with a potential perpetual existence such as Signature. The Resident Agreement

does expressly provide for annual renewal. To resolve the ambiguity whether Signature

enjoyed an indefinite contractual right under the Residential Agreement to annually renew

the lease, the court looks to the Services Agreement and other extrinsic evidence to discern

the parties' actual intent. Wonderland Shopping, 274 F.3d at 1095; Port Huron Ed. Ass'n,

452 Mich. at 323; Klapp, 468 Mich. at 453-54, 469-70. Signature's position that the

Resident Agreement should be read as a stand-alone document, and defendants' position

that the Resident Agreement is merely an exhibit lacking any enforceable promises, are

each unreasonable given the totality of the circumstances under which the Resident

Agreement and Services Agreement were executed. Cleveland, 264 Mich. at 257.

GCFH agreed under Section 2 of the Services Agreement to 

make available space at [GCFH], as reasonably necessary, to enable SHC

to perform the services contemplated under this Agreement provided that

such space shall include, without limitation, that certain office space at the

[GCFH] FACILITY which is described on EXHIBIT B attached hereto[.]

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The Services Agreement also provided for an initial five-year term, after which Signature

could elect to extend the term "for successive one year periods." Services Agreement,

Section 3, at 4. The Services Agreement could be terminated by either Signature or

GCFH: (1) for a breach of the Services Agreement; (2) for either parties' demonstrated

insolvency or potential insolvency i.e. filing for bankruptcy; (3) for the suspension or

revocation of a necessary license, certificate, or other legal credentials held by either party;

or (4) "for cause."

Defendants have not shown by a preponderance of the evidence that "Exhibit B"

referred to in Section 2 of the Services Agreement "as attached hereto" was in fact an

earlier Resident Agreement. The Services Agreement expresses the parties' intent that it

could be terminated before the end of its term based on circumstances applicable to

Signature as a corporate entity, such as insolvency or loss of necessary licensing.

Signature's right to renew the five-year Services Agreement "for successive one year

periods" was dependent upon Signature's continuing right "to perform the services

contemplated under" the Services Agreement. The Services Agreement does not address

the situation where Signature is delivering personal services to GCFH residents under

separate contracts executed by Signature and the residents to which GCFH is not a party.

Upon an examination of the Resident Agreement in conjunction with the Services

Agreement and other extrinsic evidence presented at trial, the court finds that the parties

never reached a "meeting of the minds" whether Signature had the right to renew the

Resident Agreement under paragraph 12 in the event the Services Agreement was

terminated. Heritage Broadcasting, 170 Mich. App. at 818. The objective evidence shows

that, in executing the Resident Agreement, the parties did not contemplate the situation,

now before the court, whether Signature would have a continuing contractual right to renew

the Resident Agreement after the Services Agreement was terminated by either party. Id.

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The Services Agreement was executed on April 1, 2003, while the Resident Agreement at

issue was executed on June 30, 2008. The parties did not present evidence that the

renewal option in paragraph 12 of the Resident Agreement was negotiated, discussed,

reviewed, or considered by anyone involved in the June 30, 2008 transaction.

In sum, the parties never reached an agreement that Signature would have an

indefinite, unconditional right to lease Apartment No. 602A. Neither did the parties reach

an agreement that the Resident Agreement would automatically terminate upon termination

of the Services Agreement. Accordingly, the court finds that Signature does not have a

contractual right to renew the Resident Agreement under paragraph 12 of the Resident

Agreement.

III. Conclusion

Signature does not have a contractual right to renew the June 28, 2008 Resident

Agreement lease. Defendants are entitled to entry of judgment on Signature's claim for

declaratory and injunctive relief that Signature is currently entitled to occupy Apartment No.

602A under the terms of the Resident Agreement lease. Signature is entitled to entry of

judgment on defendants' counterclaim for rescission of the June 28, 2008 Resident

Agreement. Defendants are entitled to entry of judgment on their counterclaim that they

are now entitled to evict Signature from Apartment No. 602A. Accordingly, Signature shall

vacate Apartment No. 602A within ten days of entry of this Order. Consistent with the

court's comments from the bench on October 27, 2009, the court makes no ruling here as

to Signature's continuing right to access its clients at the GCFH facility. 

SO ORDERED.

Dated: December 10, 2009

s/George Caram Steeh 

GEORGE CARAM STEEH

UNITED STATES DISTRICT JUDGE

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CERTIFICATE OF SERVICE

Copies of this Order were served upon attorneys of record on

December 10, 2009, by electronic and/or ordinary mail.

s/Marcia Beachemin

Deputy Clerk

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