The Honor able John D. Holschuh, United States District J udg e for the Southern District * of Ohio, sitting by

desig nation. NO T REC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 06a0897n.06 F iled: Dec em ber 15, 2006 No. 05-1679 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
RAYM OND A. EVANS and ALB ERT W. EVANS, Trustee of Trust A und er Dec laration of T rust dated July 11, 1991, P lai nt iffs/C ount e r -D e fend ant s/ App e lle e s,
v. SC SOUT HF IELD TWE LVE ASSOCIATE S, LL C, a Michigan limite d liabi lity com pany, Defendan t/CounterP laintif f/ Appellan t. ) ) ) ) ) ) ) ) ) ) ) ON AP P EA L F RO M THE U NI TED STA TES D ISTRIC T C OU RT F OR THE E AST ERN D ISTRIC T OF MICHIGAN

Before: G IBBO NS and ROGERS, Circ uit Jud ges; HOLSCHUH, District Judge. *
JOHN D. HOLS CHUH, District Judge. Appellee s filed a de clar atory judgme nt action seekinga dec laration that their proposed tra nsfer of intere st in commercial pr operty did not trig g er a ppellant’s rig ht of first re fusal under the terms of the commerc ial lease . This is an appea l from the district cour

t’s order g rantingappellee s’ motion for summary judgme nt, denying
a pp e lla nt’ s mo tio n f

or pa rt ia l summa

ry jud g me nt, and

dis mis sin ga

pp e lla nt’ s c ounte rc la im w ith pr e jud ic e . App e lla

nt a rgue s th at th e dis tr ic t c ourt e rr e d in c on c lud ingthat th e ri g ht o f f ir st2

re fu sa l w a s n ot t

ri g g e re d. I t a lso argue s th at th e or de r d ism iss ingthe c ounte rc la im i n it s e nti re ty
was ove rly

broad. F or the followingrea sons, we af firm with respe ct to the trial cour t’s judgme nt on the cr oss-motions for summary judgme nt, but rever se and r emand with re spect to the trial court’s dismissal with prejudice of the e ntire counte rcla im of the appe llant. I. On J uly 11, 1969, Second Gr eenf ield Corporation and F eder al Har dwar e & Supply , Inc. enter ed into a long -term c ommercia l lease where by Fe dera l Hardw are ag ree d to rent spac e in a sh op pin gc e nte r o wn e d b y Se c on d G re e nf

ie ld. Para g ra

ph25 of the c omm e rc ia l le a se g ra nts F e de ra l H ard

wa re a ri g ht o f f ir st r e fu sa l. It r e a ds a s f

oll ow s: In the eve nt that L andlord, or a ny succe ssor landlord or owner of the demised pre mises, shall at any time desire to sell the de mised premises a

nd shall have r ece ived a bona fide wr itten offer

for the purcha se there of, such pa rty shall, within five (5) da

y s after the re c e ipt of the of fe r, tr ans mit

an e xec ute d c op y

of the of fe r . . . to the Te na nt. Th e Te na

nt s ha ll the re up on

have the ri g ht .
. . to purc ha se the int e re st o f t

he the n la nd lor d o r o wn e r a

t th e same price and on the same terms as the offe r. . . J .A. at 75. Not all transfe rs of intere st, however , wer e to trig g er this rig ht of first re fusal. Para g raph 25 g oes on to state:

[S ]uch right of

first ref usal shall not be applica

ble in the eve nt of a sale or tr ansfe r of the de mised premises by the L andlord (a s the te rm “ L and lor d” is d e fi ne d in

Para g ra ph11 he re of

) t o a ny of its office rs, direc tors and princ ipal share holders or to a ny corpor ations and/or other entities in which L andlord shall have any substantial interest. Id. Sho rt ly

a ft e r t he le a se wa s si g ne d, the or ig ina l la nd lor d, Se c on d G re e nf

ie ld, c onve y e d it sRay mond Evans and Albe rt W. Evans, Trustee, w ill herea fter be ref err ed to as “ the 1 Evans.” 3 interest in the prope rty

to Richard Eva

ns and Alber

t W. Evans. The proper

ty has re mained in the Evans fa mily but, over the year s, there ha ve bee n numerous intra- family transfe rs of intere st. The ke y issue in this case is whethe r these tr ansfe rs of intere st trigg ere d the rig ht of first re fusal. In 1 99 7, the or ig ina l te na nt, F e de ra l H ard

wa re , a ssi g ne d it s inte re st i n th e le a se to appellant, SC Southfield Twelve Assoc iates, L L C. At that tim e, Ray mond Evans owned a

75% interest in the prope rty . Albert W. Evans, Trustee of Trust A unde r De clar ation of Trust date d J uly 11, 1991, owned the r emaining25% intere st. In 1997, SC S outhfield filed suit ag ainst the 1 Ev ans , a lle g ingthat th e pr e vio us int ra -f amil y tr ans fe rs of

int e re st h a d tr ig g e re d th e ri g ht o f f ir st ref usal. SC S outhfield argued that since no money had exchang ed hands dur ing those intrafa mil y tr ans fe rs , SC S outhf

ie ld w a s n owe nti tle d to “ purc ha se ” the pr op e rt y un de r i de nti c a l te rm s and conditions, i.e. , for nothing
. The pa rties re solved that litigation by consent judg ment and a “ settlement ag ree ment and
ame ndme nt t o le a se a g re e me nt. ” Th e se ttl e me nt a g re e me nt s pe c if ic a lly re c og nize d th at SC Southfield was the Te nant and the E vans we re the owner s of the prope rty and succ essors-ininterest to the rig hts and obligations of the L andlord unde r the lea se. While SC Southfield ag ree d to dismi ss its claims concer ning the rig ht of first re fusal, it rese rved the rig ht to raise the issue
a g a i ni f th e E v an s s u

b s e qu e n t l y tr an s f

e r r e d th e i r i n t e r e s ti nth e p r o p e rty. On April 21, 2003, Ray

mond Evans sent a le tter to SC S outhfield, stating tha t he and Al be rt we re pla nn ingto t ra ns fe r t he ir ind ivi du a l inte re sts in t

he pr op e rt

y to T a lr a e Ho ldi ng s, L L C, a Ne va da lim ite d li a

bil ity c omp any . In d ir e c t pr op or tio n to the ir

ind ivi du a l owne rs hip4

interests, Ray

mond was to own 75% of Talra e and A lbert, as Tr

ustee, wa s to own the other 25%
. Whil e the Ev ans did

no t be lie ve that it

wa s n e c e ssa

ry un de r t he se c ir c ums tanc e s to ob ta in S C Southfield’s approva l for the pr oposed transf er of interest, they

never theless aske d for its written consent “ to avoid confusion in the future .” When SC Southfield refuse d to sign the c onsent form, the Eva ns filed a de clar atory judgme nt action in the United States District Court for the Easter n District of Michig an, see king
a de c laratio n th at th e pr op os e d tr ans fe r o f i nte re st t o T a lr a e did no t tr ig g e r t

he ri g ht o f f

ir st ref usal. The Eva

ns noted that they

did not “desire to se ll” the prope rty and had no “ bona fide written off

er f or the purc hase” of the prope rty . Moreove r, no money was e x chang ing ha

nds. They wer e simply

transfe rringtheir individual interests to their own limited liabilit y company . Acc ordingto the Evans, since they would own a “ substantial interest” in the ne w company , the proposed tra

nsfer was e x empt and did not trig g er the rig ht of first re fusal. SC So uth fi e ld f

ile d a c ounte rc la im c on sis tin gof tw o c ounts . T he fi rs t w a s e nti tle d “ Sui t for Spec ific Perf

ormanc e.” SC Southfield alleg ed that the pr oposed transf er of interest to Talra e constituted a “de sire to sell” a nd trig g ere d the rig ht of first re fusal. It further alleg ed that by ref using to honor the rig ht of first re fusal, the Eva ns had bre ache d their oblig ations under the lease . SC S outhfield asked the district court to enfor ce the terms of the le ase by order ing the Ev ans to p ro vid e a

c op y of the do c ume nts re fl e c tin gthe te rm s o f t he pr op os e d tr ans a c tio n, and to g ive SC S outhfield thirty

day s to “purcha se” the Evans’ inter ests at the same price and on the same ter ms offer ed to Talra e, i.e. , for nothing . The sec ond count of the c ounterc laim, entitled “B rea ch of Contra ct,” simply alleg ed that the Eva

ns had bre ache d their oblig ations under the lease and that SC Sout hfield had suf fer ed dama g es as a

result.5

The pa rties filed c ross-motions for summary judgme nt. After or al ar g uments and additional briefing , the district court e ntere d judgme nt in favor of the Evans. The district court found that the propose d transfe r of inter est from the Eva ns to Talrae did not trigg er the rig ht of first ref usal bec ause the Evans did not “desire to sell” the prope rty and ther e wa s no bona fide written off

er by Talra e to purc hase the proper ty . In the alter

native, the district cour

t found that the proposed tr ansac tion was exempt since the Evans we re tra nsfer ringtheir intere sts in the proper ty to Talrae , an entity

in which they

had a substantial inter est. Ba sed on these f indings, the district court g rante d the Evans’ motion for summary judgme nt, denied SC Sout hfield’s motion fo r p art ia l summa

ry jud g me nt, and

dis mis se d SC S outhf

ie ld’ s c ounte rc la im i n it s e nti re ty wi th prejudice . SC S outhfield appe aled. II. We r e vie w a

dis tr ic t c ourt ’s or de r gra

nti ngsumma

ry jud g me nt de novo
. Johnson v. Karnes , 3 98 F .3 d 8 68 , 8 73 (6 th C ir . 2 00 5) . Summa ry jud g me nt i s p ro pe r whe n “ the ple a din g s, de po sit ion s, ans we rs to i nte rr og ator ie s, and a dmi ssi on s o n f

ile , to g e the r w iththe a ff

ida vit s, if
any , s ho w that th e re is n o g e nu ine iss ue a s to any mate ri a l f

a c t and that th e mov ingpa

rt y is entitled to judgment a s a matter of law.” F ed. R. Civ. P. 56(c). In revie wingthe district court’s order , this court must draw all re asonable infere nces in fa vor of the non- moving pa rty . Johnson , 398 F.3d at 873. III . On appe al, SC S outhfield argues that: (A) the district court e rre d in holding that the proposed tra

nsfer from the Eva

ns to Talrae did not trigg er the rig ht of first re fusal; and ( B) the district court er

red in dismissing SC Sout hfield’s c ounterc laim in its entirety
.As a dis tr ic t c ourt

e xer c isi ngdiv e rs ity

jur isd ic tio n, the c ourt

wa s b ound

to a pp ly 2 Michig an law. See E

rie R.R. v. Tompk

ins , 304 U.S. 64, 78 (1938). 6 A. The fir st issue is whether the district c ourt proper ly g rante d summary

judgme nt in favor of the Eva

ns on the issue of whe ther their pr oposed transf er of interest to Talra e trig g ere d the rig ht of first re fusal. As noted above , the district court found that the rig ht of first re fusal wa s not trigg ere d beca

use: (1) the proposed tra

nsfer of intere st betwee n the Evans a nd Talra e did not
c o n s t i tu t e a

“ d e s i r e t o s e l l ” an d

th e r e w a s n o “ b o n a

f i d e w r i t t e no f

f e r ” t o p ur c h a s e th e p r o p e rty; and (2) the transa ction was e x empt beca use the Eva

ns would own a substantial intere st in Talrae
. We a ff ir m on bo th gro un ds
. 1. Pursuant to the terms of the le ase, the rig ht of first re fusal is trig g ere d only if the landlord: (1 ) “ de sir e [s] to s e ll” the pr op e rt y ; and (2 ) r e c e ive s a

“ bo na fi de wr itt e n o ff

e r” to p ur c ha se it. Michig an cour

ts have he ld that a contra ct provision containinga rig ht of first re fusal must be interpre ted nar

rowly
. LaRose Marke t, Inc. v . Sylvan Cente r, Inc. , 530 N.W.2d 505, 507 (Mich. Ct. App. 1995). The district cour t, in this case , found that SC Sout hfield’s right of first re fusal 2 was not trig g ere d since the Eva ns neither de sired to sell the prope rty nor re ceive d a bona f

ide written off

er to purc hase it. SC Sout hfield appe als both findings. SC So uth fi e ld f

ir st a rgue s th at th e Ev ans ’ d e sir e to t ra ns fe r t he ir int e re st i n th e pr op e rt

y to Talra e constituted a “ desire to se ll.” I t notes that Michiga n courts have define d a “sa le” a s “a partingwith one’s intere st in a thing for a valua ble consider ation.” Steadman v. Clem ens , 32 N. W
. 2 d 4 5 , 4 8 (M i ch
. 1 9 4 8 ) ( qu o t i n g W estern Massac husetts Ins. Co. v. Riker , 10 Mich. 279,7

28 1 ( Mic h. 18 62 )) . It is un dis pute d th at th e Ev ans pla nn e d to pa

rt wi th t he ir ind ivi du a l inte re sts in t he pr op e rt

y ; th e re le va

nt q ue sti on is whe the r t

he pr op os e d tr ans fe r w a s su pp or te d b y va lua ble consideration. As the Supreme Court of

Michig an has note d, “[t] o have c onsideration ther e must be a barg ained- for e x chang e. The re must be ‘ a bene fit on one side, or a detriment suffe red, or

service done on the other .’ Courts do not ge nera lly inquire into the sufficie ncy of consider ation.” Ge ne ra l M

oto rs C or p. v . D e pa rtm e nt o

f Tre as ur y , 644 N.W.2d 734, 738 (Mich. 2002) (inter nal citations omitt ed). SC S outhfield argues that it does not matter that Ta lrae did not intend to pay the Evans any money for the pr operty . I t contends that valua ble consider ation exis ts beca use by transfe rringtheir individual interests in the prope rty to Talrae , the Evans r ece ived the bene fit of lim iti ngthe ir

pe rs on a l li a

bil ity fo r c la ims re late d to the pr op e rt y . T he dis tr ic t c ourt

c or re c tly reje cted this argument. Any benef it the Evans re ceive d by

transfe rringtheir intere sts to a limi ted liability company arose by operation of the laws of the State of Ne vada. T here was no ba rg ainedfor e x chang e. SC So uth fi e ld f

ur the r a rgue s th at T a lr a e su ff

e re d a de tr ime nt b e c a

us e , a s th e ne w p ro pe rt

y
owner , it would be burdene d with contrac tual obligations as the succe ssor landlord. Not
surp ri sin g ly , SC S outhf

ie ld c ite s to no a

uth or ity fo r t his pr op os iti on . L ike pa

yingpr op e rt

y taxes, these oblig ations are incidental to prope rty owner ship. Talrae did not ag ree to assume the contra ctual oblig ations as succ essor landlord in e x c ha nge for tit le to t

he pr op e rt

y . B e c a us e Talra e suff

ere d no detriment and g ave nothingto the Evans in exchang e for the prope rty , the district court did not err

in finding that there w as no consider ation to support a “sa le.”8

Moreove r, while Michig an does not a ppear to have dire ctly

addre ssed the issue, many oth e r c ourt s h ave he ld t

hat th e tr ans fe r o f i nte re st f ro m in div idu a l owne rs to a no the r e nti ty
c on tr oll e d b y

tho se same ind ivi du a ls d oe s n ot c on sti tut e a “ sa le ” that tr ig g e rs a

ri g ht o f f ir st ref usal. See, e .g., Creque v. Tex aco Antilles Ltd. , 409 F.3d 150, 155 ( 3d Cir. 2005) (“Arig ht of first ref usal to purcha se re al prope rty is not trigg ere d by

the mere conveyance of that prope rty . Only when the c onveyance is marked by arms’ le ng th dealingand a c hang e in control of the pr op e rt y may that r ig ht b e e xer c ise d. ” ); Mc Gu irev . Lo we ry , 2 P.3d 527, 532 (Wy o. 2000) (“ for a tr ans a c tio n to c on sti tut e a ‘s a le ’ a nd tr ig g e r a fi rs t r ig ht o f r e fu sa l, i t mu st i nv olv e an a rm s- le ng th tr ans a c tio n r e su lti ngin a

n a c tua l c ha

ng e in c on tr ol o f t

he burd e ne d p ro pe rt

y ra the r t ha n s imp ly
mov ingit f

ro m th e ind ivi du a l owne rs to a n e nti ty c on tr oll e d b y

the m.” ); W

allasey Tenants Ass’n v. Varner , 892 A.2d 1135 (D.C. 2006) ( holding that tra nsfer of prope rty

from an individual to a
c or po ratio n who lly

owne d b y

the same ind ivi du a l w a s n ot a sa le tr ig g e ri nga

ri g ht o f f ir st
re fu sa l) ; Kroehnke v . Zimmerman , 4 67 P.2 d 2 65 (C olo . 1 97 0) (t ra ns fe r o f i nte re st i n r e a l pr op e rt y from individual owner s to corporation in which they owned a ll the stock did not trigg er r ight of first ref usal). It is bey ond dispute that the proposed tra nsfer of intere st from the Evans to Ta lrae was not the re sult of arms’ leng th dealingand would not re sult in any rea l chang e in control of the prope rty . Under

these c ircumstance s, we a g ree that the rig ht of first re fusal wa s not trigg ere d. In a dd iti on

to f ind ingno g e nu ine iss ue of mate ri a l f

a c t c on c e rn ingthe Ev ans ’ “ de sir e to sell,” the district cour

t also found no g enuine issue of materia l fac t conce rningwhether there was a bona f ide written off

er by Talra e to purc hase the proper ty . SC S outhfield had a

rgued that Ray mon d E va

ns ’ a ff ida vit , s ub mitte d in

su pp or t of the Ev ans ’ m oti on

fo r s umm ary

jud g me nt, memorialized the terms of the pr oposed transf er of interest and should, ther efor e, be inter prete d9

a s a bo na fi de wr itt e n o ff

e r t o p ur c ha se the pr op e rt y . T he dis tr ic t c ourt

pr op e rl y re je c te d th is claim, noting that Ray

mond Evans spec ifically

stated in that aff

idavit that he had not re ceive d a bo na fi de wr itt e n o ff

e r o f p ur c ha se , a

nd no tin gthat SC So uth fi e ld h a d p re se nte d n o e vid e nc e to th e c o n tr ar

y. On appe al, SC S outhfield argues that it is inequitable to permit the Evans to avoid the ri g ht o f f ir st r e fu sa l by

sim ply re fu sin gto r e du c e the purc ha se of fe r t o wri tin g . SC S outhf ie ld
a lle g e s th at th e Ev ans have de vis e d a mul ti- ste p s c he me to c onve y the ir int e re st i n th e pr op e rt

y without ever trig g eringSC S outhfield’s rig ht of first re fusal. The consent a g ree ment the Evans
a sk e d SC S outhf

ie ld t o s ig n s tate s th at Ra

y mon d E va

ns and Al be rt W. E va ns , T ru ste e , w ill “initially be the sole me mbers” of

Talra e. B ased on this statement, SC Southfield speculates that th e E v an s i n t e n d

t o l at e r c o nv e y th e i r

o w n e r s h i p i nT a l r a e , an d h e n c e o w n e r s h i p o f

th e p r o p e rty, to others. Under

Michig an law, unle ss SC Southfield could prove ba d faith or wr ong doing, suc h
a conve y ance would not trigg er the rig ht of first re fusal. See LaRose Marke t , 530 N.W.2d at 508-09 (holdingthat sale of c orporate stock, as oppose d to sale of the r eal pr operty owned by

the corpor ation, would not trigg er the rig ht of first re fusal). The c ourt nee d not speculate conce rningthe Evans’ future pla ns for owne rship of Talr ae. The only issue curr ently

befor e the Court is whethe r the propose d transfe r of inter est from the Evans to Talra e trig g ers the r ight of first ref usal. SC S outhfield is corre ct that the cour t must t ake equitable c onsiderations into acc ount. I n LaRose Marke t , the cour t noted that when a

n individual sells his property

to a cor poration, “e quitable consider ations such as the pa rties’ motives for the sale a nd the re lationship between the parties be come r eleva nt.” Id. at 509. In this case, howeve r, there is no evidence of an illicit motive. Ray mond Evans stated in his aff idavit that he10

and the Tr us t w ant t o tr ans fe r t

he ir int e re sts to a

lim ite d li a

bil ity c omp any to p ro te c t th e ir pe rs on a l a sse ts whil e pr e se rv ingthe same tax status . T he re is s imp ly no e vid e nc e in t

he re c or d to
su pp or t a fi nd ingthat th e pr op os e d tr ans fe r w a s in ste a d th e fi rs t st e p in an e la bo rate sc he me to de pr ive SC So uth fi e ld o f i ts r ig ht o f f ir st r e fu sa l. S C Southf

ie ld’ s sp e c ulatio ns are ins uf fi c ie nt t o survive summary

judgme nt. Upon de novo revie w, we c onclude that the district c ourt corr ectly found that the proposed tra

nsfer of intere st from the Evans to Ta lrae did not trigg er the rig ht of first re fusal. The Eva ns did not “desire to sell” the proper ty and did not rec eive a

“bona f ide written off

er” of purcha se. More over, unde r the c ircumstance s prese nted her e, equity does not requir e a dif

fer ent result. 2. Even if we found that the Eva ns “desire d to sell” the prope rty and had r ece ived a “ bona fide wr itten offer ” of pur chase from Ta lrae , we would ne verthe less aff irm on the alternate g round that the proposed tr ansac tion is contractually exempt from the rig ht of first re fusal. As noted
a bo ve , p ara g ra

ph25 of the le a se e xpre ssl y

state s th at th e ri g ht o f f

ir st r e fu sa l do e s n ot a

pp ly “ in the e ve nt o f a

sa le or tr ans fe r o f t

he de mis e d p re mis e s b y

the L and lor d ( a s th e te rm “ L and lor d” is de fi ne d in Para g ra ph11 he re of

) t o a ny of its of fi c e rs , d ir e c tor s a

nd pr inc ipa l sh are ho lde rs or to any corpor ations and/or other entities in which L andlord shall have any substantial interest.” I t is un dis pute d th at th e Ev ans pla nn e d to tr ans fe r t

he ir e nti re int e re st i n th e pr op e rt y to Ta lr a e , a lim ite d li a

bil ity c omp any in whic h th e y

wo uld own a “ su bs tanti a l inte re st. ” SC Southfield neverthe less argues that the e x ception is inapplicable beca use the Eva

ns fall outside the def inition of “L andlord” as def ined in para g raph 11 of

the lease . That par ag raph r eads a s11

fo llo ws :
As used in this Parag raph 11, the term “L andlord” is defined a s and

shall include all of the f

ollowing pe rsons and e ntities, joi ntly and se ve ra lly : ( i) L and lor d s ha ll i nc lud e the pe rs on (s ) a nd or e nti ty (i e s) desig nated a s L andlord at Page 1 of this L ease , jointly and sever ally ; (ii) if the L andlord de signated at Pag e 1 is a c orporation, L andlord shall include a ll officer s, director s and principa l share holders ther eof, jointly and seve rally , and also a ll corporations and/or other

entities in which L andlord or its off icer s, director s, or principal shar eholder s, jointl y and seve rally , shall have a ny substantial interest; (iii) if the L andlord de signated at Pag e 1 is or consists of one or more individuals and/or any unincorporated entity (ies), L andlord shall include a ll corporations and/or other entities in which such individual(s), e ntity (ies), or any members of such unincorpor ated e ntity (ies), jointly and seve rally , shall have any su bs tanti a l inte re st. Acc ordingto SC Southfield, beca use Second G ree nfield is the only entity desig nated a s

“ L and lor d” on

pa g e 1 o f t

he le a se , th e e xce pti on

to t he ri g ht o f f

ir st r e fu sa l w a s inte nd e d to a pp ly
on ly to S e c on d G re e nf

ie ld a nd no t to any

su c c e sso rs -i n- int e re st. The district cour

t corre ctly

reje cted this argument. First, the de finition of “L andlord”
c on ta ine d in

pa ra g ra ph11 is n ot limited to the entity desig nated on pa g e 1 of the lease ; instead, the provision states that the ter m “L andlord” “ sh all include ” the e ntity desig nated on pa g e 1. S ec o n d , th e d ef

i n i t i o ni mp l i ci t l y

co n t em p l at es th atth e i d en t i ty o f t h e “ L an d l o rd ” m ay

ch an ge over time; it contains sepa rate provisions dependingon whether the “L andlord” is a corpor ation or an individual. More importantly , as the district cour t noted, “the Settlement Agree ment and Second Amendme nt to the L ease Ag ree ment, signe d by Def endant a nd Plaintiffs on April 16, 1998, expressly

states that Ray

mond A. Evans and A lbert W. Evans are ‘the succ essors-ininterest to the rig hts and obligations of the L andlord unde r the Maste r L ease , and fe e owne rs of12

the Property .’” J.A. at 42. As we r ead the amendment, the pa rties expressly

ag ree d that the Ev ans a c qu ir e d a ll o f t

he ri g hts and

ob lig atio ns of

the or ig ina l la

nd lor d, inc lud ingthe ri g ht t o invoke the exception to the rig ht of first re fusal. Upon de novo revie w, we c onclude that the district c ourt proper ly found that the propose d transfe r wa s an exempt transac tion and did not trigg er the rig ht of first re fusal. B. The sec ond issue SC S outhfield raise s on appea l conce rns the district cour t’s dismiss al of SC S outhfield’s counte rcla im in it s entirety . SC S outhfield argues that the district cour t’s order
was ove rly

broad. The district court dismissed not only the portions of the c ounterc laim that related to the rig ht of first re fusal, which w as the sole subjec t of the cr oss-motions for summary judgme nt, but also the brea ch of c ontrac t counterc laim which, ac cordingto SC Southfield, encompa ssed additional bre ache s not addresse d by the par ties in their motions for summary judgme nt or by

the district court in its opinion. As noted above , SC S outhfield’s counte rcla im consisted of two counts. Count Isoug ht specific perf

ormanc e of the rig ht of first re fusal, and inc luded detailed f actua l alleg ations
conce rningthe proposed tr ansfe r of inter est from the Eva ns to Talrae . Count I Iwas e ntitled

“ B re a c h o f C on tr a c t.” I t si mpl y a lle g e d th at th e le a se wa s a bin din gc on tr a c t, t

hat SC So uth fi e ld ha d p e rf or me d a ll o f i ts o bli g atio ns , th at th e Ev ans ha d b re a c he d th e ir ob lig atio ns and

that, a s a
re su lt, SC So uth fi e ld h a d s uf fe re d mo ne tary

dama g e s in

an amou nt n ot ye t de te rm ine d. In te rm s of org anizational structure, Count I Istood alone and did not expressly incorporate any

of the fac tual alleg ations contained in Count I . Moreove r, there is no indication that SC Southfield was seekingdamag es for

brea ch of c ontrac t only

as alter native re lief to the spec ific per formanc e13

reque sted in Count I
.

Neve rtheless, the Eva

ns interpre ted the bre ach of contra ct claim as nothingmore than the “dama g es” c ounterpa

rt to the suit for spec ific per formanc e. The y conducte d no additional dis c ov e ry on the br e a c h o f c on tr a c t c la im. Th e Ev ans mov e d f or summa ry jud g me nt o n th e ir decla ratory judgme nt action and “ entry of an or der dismissing the de fenda nt’s counter

complaint in whic h d e fe nd ant c on te nd s th at pl a int if fs ’ a nn ounc e d inte nti on s to tr ans fe r t he ir owne rs hip int e re sts int o a

lim ite d li a

bil ity c omp any tr ig g e rs in d e fe nd ant a

ri g ht o f f ir st r e fu sa l to purc ha se the subject prope rty .” J.A. at 130. SC So uth fi e ld f

ile d a re sp on se to t

he Ev ans ’ m oti on

fo r s umm ary

jud g me nt a lon gwi th i ts own “motion for pa

rtial summary

judgme nt.” In the ac company ing me morandum, re fer

ringto the counter claim, SC S outhfield stated in a f ootnote, “[t] he bre ach of

contra ct by

Plaintiffs is not limit ed to the wr ong ful ref usal to honor the Rig ht of First Ref usal, but also extends to ot her brea ches, inc luding Plaintiffs’ f ailure to c onstruct additional improvements to the Proper ty as require d by

the Master

L ease .” J.A. at 316-17. SC S outhfield’s motion for par tial summary judgme nt, however , was limited solely to the question of whethe r the propose d transfe r of interest trig g ere d the rig ht of first re fusal. Af te r f ind ingthat th e pr op os e d tr ans fe r o f i nte re st d id n ot t ri g g e r t he ri g ht o f f

ir st r e fu sa l, the district court g rante d summary judgme nt in favor of

the Evans. With no further discussion, the dis tr ic t c ourt

summa ri ly dis mis se d SC S outhf

ie ld’ s e nti re c ounte rc la im w ithpr e jud ic e . SC Southfield did not file a motion to alter or amend the judgme nt, but inst ead f iled its noti ce ofContrary to the Evans’ a

rgument, SC S outhfield was not re quired to bringthe alleg ed 3 e rr or to t he atte nti on

of the dis tr ic t c ourt

pr ior to f ili ngits no tic e of

a pp e a l. It ha d a

fi na l, appea lable orde r disposing of the entire case . That is all that was re quired.

14 a pp e a l. 3 On a pp e a l, S C Southf

ie ld a rgue s th at di smi ssa l of

the e nti re c ounte rc la im w a s o ve rl y broad a nd premature since neither pa rty had moved f

or summary

judgme nt on Count I Iof the counter claim, and the district c ourt’s opinion was limited to the question of whether the proposed tr ans fe r o f i nte re st tri g g e re d th e ri g ht o f f ir st r e fu sa l. S C Southf

ie ld t he re fo re ur g e s th is c ourt

to
rema nd the ca se for

further proce eding s. In response , the Evans a

rgue that the district cour t properly dismiss ed the e ntire counter claim since the brea ch of c ontrac t claim was simply an alter nate theor y of re cover

y , i.e., the “da mag es” c ounterpa

rt to the suit for spec ific per formanc e. The ref ore, onc e the district cour t found that the propose d transfe r of inter est did not trigg er the rig ht of first re fusal, ther e wa s no need to c onsider the br eac h of contra ct claim. The Evans also a rgue that nothingin the
c ounte rc la im i tse lf

wo uld have put th e dis tr ic t c ourt on no tic e that th e br e a c h o f c on tr a c t c la im encompa ssed any

thing other

than the rig ht of first re fusal. The counter claim is devoid of any fac tual alleg ations conce rningthe spec ific alleg ed bre ache s. SC So uth fi e ld n ote s, ho we ve r, that F e de ra l Ru le of Civ il Pr oc e dure 8( a )( 2) re qu ir e s o nly “a shor t and plain statement of the claim showingthat the pleade r is entitled to relief.” The Supreme Court has he ld that the plaintiff must simpl y “g ive the def

endant f air notice of what the plaintiff’s cla im is and the g rounds on which it re sts.” Conley v. G ibson , 355 U.S. 41, 47 (1957). I t mu st c on ta in e ith e r d ir e c t or inf e re nti a l a lle g atio ns wi th r e sp e c t to a ll m ate ri a l e le me nts
nece ssary to sustain a rec overy

under some via

ble theory
. Allard v. W

eitzman ( In re De LoreanSC S outhfield contends that if the Evans had c onducted a ny discovery

on the bre ach of 4 contra ct claim, they

would have disc overe d its true scope.
15 Motor Co.) , 991 F.2d 1236, 1240 ( 6th Cir. 1993). The discove ry proce ss then provides the
avenue by

which the pa

rties identify

and re fine the spe cific c laims and issues. Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 512 (2002). 4 Th e dis se nt c on c lud e s th at th e a lle g atio ns c onta ine d in Count I Iof

the c ounte rc la im f

a il t o state a c laim for bre ach of contra ct bec ause SC Southfield neg lects in Count I Ito set forth the specific g rounds on which the c laim rests. Howe ver, a ppellees did not move in the district cour t to dismi ss Count I I , pursuant to Rule 12(b)( 6) of the F eder al Rules of Civil P roce dure, f or fa ilure to state a c laim upon which re lief may be g rante d; the dissent’s rationale was not ar g ued in the dis tr ic t c ourt ; and

the dis tr ic t c ourt

ma de no su c h f

ind ing . Ins te a d, the dis tr ic t c ourt sim ply summarily

dismiss ed both counts of the c ounterc laim with prejudice, w ithout any discussion of the basis for suc h a dismissal. I t is li kely that the district court c oncentr ated on the only issue that was fully briefe d and ar g ued – the que stion of whether the rig ht of first re fusal had be en trig g ere d – and that the district cour t simpl y overlooke d the question of monetar y damag es for

any other alleg ed bre ach of

contra ct as set f

orth in Count I Iof the c ounterc laim. Rather than spe culate, how ever , we c onclude that in the a bsence of a de cision by

the district court spec ifically

addre ssing Count I Iof the c ounterc laim, summary judgme nt on that
c ount s ho uld

be va c ate d a

nd the c ount r e mand e d to the dis tr ic t c ourt fo r f ur the r p ro c e e din g s in
acc ordanc e with this opinion. IV. Upon de novo revie w, we a ffirm the district c ourt’s judg ment g rantingthe Evans’ motion16

for summary

judgme nt and deny

ing SC Southfield’s motion for partial summary judgme nt on the issue of SC Sout hfield’s a lleg ed rig ht of first re fusal under its lease. Howe ver, be cause the district court er

red in dismissing SC Sout hfield’s c ounterc laim with prejudice in its entirety , we
reve rse a nd rema nd for f urther c onsideration the a lleg ed re mainder of the bre ach of

contra ct claim set for

th in CountI Iof the c ounterc laim, exclusi ve of a ny claim that the Eva

ns brea ched the lease in question by

ref using to g rant SC Southfield a rig ht of first re fusal.17

JULIA SMITH GIBBONS , Circuit Judge, concurr ing in part and d issenting i n part. Iconcur fully in Parts I , I I , and I I I .A. of the ma jority opinion but dis ag ree with its di sposition of the counter claim in Part I I I .B. I cannot r ead SC Southfield’s counter claim for br eac h of contra ct as putting the Evans on notice that SC Southfield asserted a ny brea ch other

than a br eac h of the rig ht of first re fusal cla

use. Th e e nti re ty

of the br e a c h o f c on tr a c t c la im i s: 18 . T he Ma ste r L e a se c on sti tut e s a bin din gc on tr a c t be tw e e n th e pa rt ie s. 19. SC S outhfield has per formed a ll of its obli g ations under the Ma ster L ease . 20. Plaintiffs/Count er- Def endants have bre ache d their oblig ations under the Master L ease . 21 . A s a c on se qu e nc e of

the br e a c h b y

Pla int if fs /Co un te r- De fe nd ants of the ir obligations under the Master L ease , SC S outhfield has suff ere d damag es in an amount not y et deter

mined, but believed to be in e x cess of $1.4 Milli on. In my vie w, the se a lle g atio ns a lon e , e ve n und e r l ibe ra l pl e a din gre qu ir e me nts , d o n ot s tate a cla im. As the majority

opinion notes, “the plaintiff must simply ‘g ive the def

endant f air notice of what the plaintiff’s cla im is and the g rounds on which it re sts.’ Conley v. G ibson , 3 55 U. S. 41, 47 (1957). It must contain either dire ct or infe rential a lleg ations with respec t to all material elements ne cessa

ry to sustain a rec overy

under some via

ble theory
. Al lar

d v . W e itzma n ( In re DeLorean Motor Co.) , 9 91 F .2 d 1 23 6, 12 40 (6 th C ir . 1 99 3) .” (O p. 14 .) Th e se a lle g atio ns fa il that standard. While they provide notice of the c laim, they do not provide notice of

the “grounds
on wh ic h it re sts .” Rathe r, the a lle g atio ns are le g a l c on c lus ion s. Whil e on e c ou ld r e a d th e se alleg ations with the rest of the c omplaint as assertinga violation of the right of first re fusal provision, SC Southfield has not alleg ed any fac ts supporting a

claim of some other

brea ch. Nothing a bout the counter claim would put the Evans on notice that some other br eac h was claimed. Thus, it is hardly surprisingthat no discovery was done on such a c laim, that the Evans18

did no t me nti on

any oth e r c la im i n th e ir

summa ry jud g me nt m oti on , a

nd that th e dis tr ic t c ourt

did not refe r to any

other c laim in its order
. Be cause the only

interpre tation of the counte rcla im under which a claim for br eac h of contra ct is stated incorpor ates the r ight of first ref usal provision, it is also unsurprising that the Ev ans did no t mo ve to d ism iss Count I I , p ur su ant t o Ru le 12 (b )( 6) of the F e de ra l Ru le s o f C ivi l Procedur e, for

failure to state a c laim upon which re lief may be grante d. The Eva

ns did, howeve r, move for

summary judgme nt on the entirety of the c ounterc laim of which they wer e provided notice . Any

alleg ation that SC S outhfield was una war e that the e ntire counte rcla im was subject to judg ment is disingenuous. SC Southfield included a footnote in its response to the mot ion fo r s umm ary

jud g me nt c la imi ngoth e r b a se s f or the br e a c h o f c on tr a c t c la im b e c a us e it
rec og nized the entire c ounterc laim was at risk. It did not seek to amend its complaint to state a claim. This last-minute footnote ca nnot substit ute for a

proper pleadingand ca

nnot provide a ba sis on wh ic h SC S outhf

ie ld c an avo id e ntr

y of summa ry jud g me nt o n it s e nti re c ounte rc la im. Iwould aff

irm the district court’s dismissal of the counte rcla im in it s entirety and dissent from the major ity ’s dec ision to remand the counte rcla im for consider ation of some unplea ded br e a c h o f c on tr a c t c la im.