Court Opinion

ID: 3177753
Source: CourtListenerOpinion
Date Created: 2016-02-17 12:21:46.479717+00
Date Added: 2024-06-11T14:31:18.798439
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

DAVID J. STANTON & ASSOCIATES, INC.,                                 UNPUBLISHED
                                                                     February 16, 2016
               Plaintiff-Appellee,

v                                                                    No. 324760
                                                                     Wayne Circuit Court
MIRIAM SAAD,                                                         LC No. 2013-000961-CK

               Defendant-Appellant.

Before: SERVITTO, P.J., and SAAD and O’BRIEN, JJ.

PER CURIAM.

        Defendant, Miriam Saad, appeals as of right the trial court’s November 20, 2014 final
judgment, awarding plaintiff, David J. Stanton & Associates, Inc., $93,910.08 in damages and
$139,394.34 in attorney fees and ordering defendant to convey title of the real property at issue
to plaintiff by general warranty deed after granting summary disposition to plaintiff pursuant to
MCR 2.116(C)(10) (no genuine issue of material fact). We reverse and remand for further
proceedings.

                                       I. BACKGROUND

        In 1999, defendant, as lessor, entered into a 35-year lease with Wendy’s International
(Wendy’s), as lessee, for undeveloped land in Southgate, Michigan, in anticipation of a Wendy’s
restaurant being built on the land. The lease included an “option to purchase the Real Property.”
After the restaurant was built, Wendy’s assigned its interest in the lease to Barbara and David
Wexall and their related corporations (Wexall) in 2001. Ten years later, Wexall assigned its
interest in the lease to plaintiff. In 2012, plaintiff decided to exercise the option to purchase the
land but not the restaurant because, according to plaintiff, it had already purchased the restaurant
from Wexall.

        Plaintiff provided written notice of its intent to exercise the option to defendant and hired
a Member of Appraisal Institute (MAI) appraiser as required by the lease, who appraised the land
at $350,000.00. After defendant failed to respond to the written notice and the appraisal,
plaintiff obtained a second appraisal by an MAI appraiser, who appraised the land at
$300,000.00. At plaintiff’s request, the two appraisers reconciled their appraisals and concluded
that the fair market value of the land was $325,000.00. Plaintiff thereafter demanded that closing
occur within 60 days. In response, defendant obtained an appraisal by a non-MAI appraiser, who
appraised the land and the restaurant at $600,000.00.
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        In January 2013, plaintiff filed this action, alleging breach of contract and seeking
specific performance, damages, and attorney fees under the lease. In response, defendant filed a
counter complaint, alleging breach of contract and seeking declaratory relief as to whether
plaintiff had the right to exercise the option to purchase. Defendant also moved for summary
disposition pursuant to MCR 2.116(C)(8) (moving party entitled to judgment as a matter of law)
and (C)(10), arguing that plaintiff’s attempt to exercise the option to purchase was defective
because it sought to purchase the land only. Plaintiff argued that summary disposition was
improper because it had previously purchased the restaurant and because a question of material
fact existed as to whether the option to purchase was for the land or for the land and the
restaurant.

        After hearing the parties’ arguments, the trial court denied defendant’s motion for
summary disposition and granted summary disposition to plaintiff pursuant to MCR 2.116(I)(2).1
It concluded that there was no genuine issue of material fact as to whether the option to purchase
included the option to purchase the land only. It ordered that the fair market value of the land be
determined by the two previous appraisers as well as a third MAI appraiser chosen by the two
previous appraisers and paid for by defendant. Closing was required to occur within 60 days.
On October 16, 2013, the trial court entered a written order prepared by plaintiff reflecting the
same.

        Defendant moved for reconsideration, raising the same arguments as it had before as well
as arguing that plaintiff was not entitled to exercise the option to purchase because the option
was not specifically assigned from Wendy’s to Wexall and from Wexall to plaintiff. The trial
court disagreed and eventually re-entered the October 16, 2013 order on December 11, 2013.
Plaintiff applied for leave to appeal the December 11, 2013 order, and, in lieu of granting that
application, we vacated the trial court’s December 11, 2013 order. Stanton & Assoc, Inc v Saad,
unpublished order of the Court of Appeals, entered March 14, 2014 (Docket No. 319633). We
expressly found that defendant had “raised genuine issues of material fact [as to] whether the
lease’s description of ‘real property’ includes the improvements” and remanded this matter to the
trial court for further proceedings. Id. We also ordered the trial court “to reconsider defendant’s
motion for summary disposition in light of the argument that plaintiff does not have the legal
right to exercise the option to purchase.” Id.

       On remand, plaintiff moved for summary disposition pursuant to MCR 2.116(C)(8) and
(C)(10), arguing that the option to purchase was specifically assigned from Wendy’s to Wexall
and from Wexall to itself. In support of this position, it provided a “Reaffirmation of
Assignment of Option to Purchase” indicating the same that was dated May 9, 2014, and signed
by the Wexalls, Wendy’s Vice President of Corporate Counsel, and David J. Stanton. Plaintiff
additionally argued that there was not a question of material fact as to whether the option to

1
  MCR 2.116(I)(2) permits a court to render a judgment in favor of the party opposing the
summary disposition motion if it appears to the court “that the opposing party, rather than the
moving party, is entitled to judgment as a matter of law.” Washburn v Michailoff, 240 Mich. App.
669, 672; 613 NW2d 405 (2000).

                                                -2-
purchase was for the land only. In response, defendant argued that the plain language of the
assignments from Wendy’s to Wexall and from Wexall to plaintiff demonstrated that the option
to purchase was not specifically assigned.

        Again, after hearing the parties’ arguments, the trial court granted summary disposition to
plaintiff. It concluded that there was no genuine issue of material fact as to whether the option to
purchase included the option to purchase the land only. It also concluded that, in light of the
May 9, 2014 reaffirmation, there was no genuine issue of material fact as to whether the option
to purchase was specifically assigned from Wendy’s to Wexall and from Wexall to plaintiff.
Thus, the trial court entered an order requiring a third appraisal to be completed on the land and
requiring defendant to convey the property at issue to plaintiff. At a subsequent hearing, the trial
court awarded plaintiff $93,910.08 in damages and $139,394.34 in attorney fees over defendant’s
objection and without explanation. This appeal followed.

      Before this Court, defendant filed a motion for stay and for immediate consideration,
which we granted. Stanton & Assoc v Saad, unpublished order of the Court of Appeals, entered
December 11, 2014 (Docket No. 324760).

                                          II. ANALYSIS

        On appeal, defendant argues that the trial court erred in granting summary disposition to
plaintiff for two reasons. First, she argues that the trial court erred in concluding that no genuine
issue of material fact existed as to whether the option to purchase was specifically assigned from
Wendy’s to Wexall and from Wexall to plaintiff. Second, she argues that the trial court erred in
concluding that there was no genuine issue of material fact as to whether the option to purchase
was for the land or for the land and the restaurant. We agree in both respects.

                                  A. SPECIFIC ASSIGNMENT

       A trial court’s decision on a motion for summary disposition pursuant to MCR
2.116(C)(10)2 is reviewed de novo. BC Tile & Marble Co, Inc v Multi Bldg Co, Inc, 288 Mich
App 576, 583; 794 NW2d 76 (2010). “The proper interpretation of a contract is a question of
law that this Court reviews de novo.” In re Smith Trust, 274 Mich. App. 283, 285; 731 NW2d 810
(2007). The ground lease in this case, like ordinary leases, is “[a] contract by which a rightful
possessor of . . . property conveys the right to use and occupy the property in exchange for
consideration[.]” NACG Leasing v Dep’t of Treasury, 495 Mich. 26, 29, n 10; 843 NW2d 891
(2014), quoting Black’s Law Dictionary (9th ed). Thus, it is subject to the ordinary rules of
contract interpretation. G&A Inc v Nahra, 204 Mich. App. 329, 330-331; 514 NW2d 255 (1994);
Sprik v Regents of Univ of Mich, 43 Mich. App. 178, 186; 204 NW2d 62 (1972). The primary
goal of contract interpretation is to honor the parties’ intent. Stone v Auto-Owners Ins Co, 307

2
  While the parties sought summary disposition pursuant to subsection (C)(8) in addition to
subsection (C)(10) before the trial court, it is apparent that summary disposition was granted
pursuant to (C)(10) because the parties and the trial court relied on evidence beyond the parties’
pleadings. See Krass v Tri-Co Security, Inc, 233 Mich. App. 661, 665; 593 NW2d 578 (1999).

                                                -3-
Mich App 169, 174; 858 NW2d 765 (2014). “If the contractual language is unambiguous, courts
must interpret and enforce the contract as written because an unambiguous contract reflects the
parties’ intent as a matter of law.” Hastings Mut Ins Co v Safety King, Inc, 286 Mich. App. 287,
292; 778 NW2d 275 (2009).

       In this case, the ground lease does, in fact, include an option to purchase. Specifically,
§ 30 provides as follows:

       30.     OPTION TO PURCHASE

               In consideration of and as a material inducement to Lessee [Wendy’s] to
       enter into this Lease, Lessor [defendant] hereby grants to Lessee the option to
       purchase the Real Property (the “Option”) on and subject to the following
       conditions:

                                              * * *

               G.      Assignment of Option

                       This Option and all rights may be assigned by Lessee at any time
       before or after exercise of the Option without notice to or consent by Lessor.
       Assignment of this Lease shall not constitute an assignment of this Option unless
       specifically assigned by Lessee. Lessee may retain this Option notwithstanding
       an assignment of this Lease. [Emphasis added.]

The memorandum of lease provides the same:

       5.      OPTION TO PURCHASE

              In consideration of and as a material inducement to Lessee to enter into
       this Lease, Lessor hereby grants to Lessee the option to purchase the Real
       Property (the “Option”) on and subject to the following terms and conditions:

                                              * * *

               B.      Assignment of Option

                      This Option and all rights may be assigned by Lessee at any time
       before or after exercise of the Option without notice to or consent by Lessor.
       Assignment of this Lease shall not constitute an assignment of this Option unless
       specifically assigned by Lessee. Lessee may retain this Option notwithstanding
       an assignment of this Lease. [Emphasis added.]

        This language is unambiguous. Therefore, this Court must enforce it according to its
plain and ordinary meaning. Hastings Mut Ins Co, 286 Mich. App. at 292. Doing so, the only
reasonable interpretation is that, in order for the option to purchase to be assigned, the assignor,
in this case Wendy’s and later Wexall, must “specifically assign[]” the option to purchase to the
assignee, in this case Wexall and later plaintiff. Thus, the issue before this Court is whether the

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evidence provided by the parties created a genuine issue of material fact as to whether the option
to purchase was specifically assigned from Wendy’s to Wexall and from Wexall to plaintiff. We
conclude that it did.

        A trial court properly grants a motion for summary disposition pursuant to MCR
2.116(C)(10) when there is no genuine issue of material fact, and the moving party is entitled to
judgment as a matter of law. BC Tile & Marble Co, 288 Mich. App. at 583. “When deciding a
motion for summary disposition under MCR 2.116(C)(10), a court must consider the pleadings,
affidavits, depositions, admissions, and other documentary evidence in the light most favorable
to the nonmoving party.” Ernsting v Ave Maria College, 274 Mich. App. 506, 509; 736 NW2d
574 (2007). “A genuine issue of material fact exists when the record, giving the benefit of any
reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds could
differ.” Id. at 510.

          The written assignments of this lease from Wendy’s to Wexall and from Wexall to
plaintiff do not specifically assign the option to purchase. Instead, they each generally assign
“all . . . estate, right title and interest in, to and under the Lease.” However, plaintiff has
provided the May 9, 2014 reaffirmation, which provides “that the assignment to Wexalls [from
Wendy’s] encompasses the entire interest of Wendy’s, including the specific right to exercise the
Option to Purchase contained in Paragraph 30 of said Ground Lease” and that “the assignment
and transfer of the Option to Purchase was specifically contemplated and negotiated and
[plaintiff] paid good and valuable consideration for the right to exercise the Option to Purchase.”
Applying the rules set forth above, the discrepancy between the language used in the written
assignments and the reaffirmation is sufficient to create a genuine issue of material fact. Stated
differently, reasonable minds could differ as to whether the option to purchase was specifically
assigned given the fact that the written assignments themselves are entirely void of specific
language addressing the option to purchase.

        Accordingly, we conclude that the trial court erred in concluding that no genuine issue of
material fact existed as to whether the option to purchase was specifically assigned from
Wendy’s to Wexall and from Wexall to plaintiff. Thus, summary disposition was improper, and
this question should be presented to the trier of fact.

                                 B. “THE REAL PROPERTY”

        A trial court’s decision on a motion for summary disposition pursuant to MCR
2.116(C)(10) is reviewed de novo. BC Tile & Marble Co, Inc, 288 Mich. App. at 583. “The
proper interpretation of a contract is a question of law that this Court reviews de novo.” Smith
Trust, 274 Mich. App. at 285. Whether a trial court failed to follow an appellate ruling on remand
is also a question of law that this Court reviews de novo. Schumacher v Dep’t of Natural
Resources, 275 Mich. App. 121, 127; 737 NW2d 782 (2007). Trial courts are required to comply
with a mandate of this Court after remand. Id. “The power of the lower court on remand is to
take such action as law and justice may require so long as it is not inconsistent with the judgment
of the appellate court.” Sokel v Nickoli, 356 Mich. 460, 464; 97 NW2d 1 (1959).

      In the earlier order in this case, a panel of this Court expressly concluded as follows:
“The materials provided to this Court reflect that defendant raised genuine issues of material fact

                                                -5-
whether the lease’s description of ‘real property’ includes the improvements.” Stanton, unpub
order at 1. Therefore, it expressly concluded that plaintiff “did not demonstrate in the circuit
court that it was entitled to judgment as a matter of law.” Id. Despite this clear conclusion, the
trial court, without receiving any additional evidence relating to this issue on remand, concluded
that plaintiff was entitled to summary disposition because there were not genuine issues of
material fact as to whether the lease’s description of “the Real Property” includes the
improvements. Obviously this conclusion is in direct conflict with this Court’s previous order in
this case and must be reversed. Schumacher, 275 Mich. App. at 127; Sokel, 356 Mich. at 464.

        Plaintiff takes issue with this conclusion, claiming that the law of the case doctrine does
not apply orders on applications for leave to appeal, to dicta, or to orders reversing trial court
decisions due to the existence of a genuine issue of material fact. These arguments are both
unpersuasive and irrelevant. Lower courts are prohibited from taking actions inconsistent with
the rulings of appellate courts. Schumacher, 275 Mich. App. at 127; Sokel, 356 Mich. at 464. That
is precisely what the trial court did in this case. Plaintiff also claims that the trial court obeyed
this Court’s order by reconsidering defendant’s argument relating to whether the option to
purchase was specifically assigned. While it is true that the court followed that directive, that
alone does not remedy the trial court’s failure to follow the remainder of the order.

        Moreover, even ignoring our previous order, we nevertheless would conclude that the
trial court erred in concluding that there was no genuine issue of material fact as to whether the
option to purchase was for the land or for the land and the restaurant. As stated above, the
ground lease is subject to the ordinary rules of contract interpretation. G&A Inc, 204 Mich. App.
at 330-331; Sprik, 43 Mich. App. at 186. Consequently, “[i]f the contractual language is
unambiguous, courts must interpret and enforce the contract as written because an unambiguous
contract reflects the parties’ intent as a matter of law.” Hastings Mut Ins Co, 286 Mich. App. at
292. If the contractual language is ambiguous, however, the meaning of the ambiguous language
poses a question of fact. Holland v Trinity Health Care Corp, 287 Mich. App. 524, 527; 791
NW2d 724 (2010).

       Here, the ground lease provides that the lessee has “the option to purchase the Real
Property” subject to various provisions. Section 1 of the ground lease provides as follows:

       1.      PREMISES

               In consideration of the rents, covenants and agreements hereinafter set
       forth, Lessor does hereby demise and lease to Lessee, and Lessee does hereby
       take and hire from Lessor that certain real property situated in the City of
       Southgate, County of Wayne and State of Michigan, containing approximately
       43,554 square feet of land, and any and all improvements which now are or which
       shall be situated on said real property (the “Real Property”) together with all
       rights, easements and appurtenances thereunto belonging or appertaining,
       (collectively referred to herein as the “Leased Premises”), said Real Property
       being those more fully described in Exhibit A attached hereto and made a part
       hereof by reference.

                                                -6-
Applying the rules set forth above, it is unclear whether the reference to “the Real Property” in
§ 30 includes the land or the land and the restaurant, i.e., an improvement to the land. Thus,
because the language is ambiguous, a question of fact exists.

       Accordingly, we conclude that the trial court erred in concluding that there was no
genuine issue of material fact as to whether the option to purchase was for the land or for the
land and the restaurant. Thus, summary disposition was improper, and this question should be
submitted to the trier of fact.

                            C. ATTORNEY FEES AND DAMAGES

        In light of our conclusion above, it is unnecessary for us to address defendant’s
arguments relating to the trial court’s attorney fees and damages awards. We would note,
however, that “[w]hen requested attorney fees are contested, it is incumbent on the trial court to
conduct a hearing to determine what services were actually rendered, and the reasonableness of
those services.” Reed v Reed, 265 Mich. App. 131, 166; 693 NW2d 825 (2005). There are a
variety of factors that the Michigan Supreme Court has said a trial court should consider in
assessing the reasonableness of requested attorney fees. Smith v Khouri, 481 Mich. 519, 529-
530; 751 NW2d 472 (2008). First, a trial court should determine “the fee customarily charged in
the locality for similar legal services” “us[ing] reliable surveys or other credible evidence of the
legal market.” Id. at 530-531. Then, it should consider the factors set forth in MRPC 1.5(a) and
Wood v Detroit Auto Inter-Ins Exch, 413 Mich. 573, 588; 321 NW2d 653 (1982), to determine
whether the amount requested is reasonable. Id. at 529-530. Consequently, if attorney fees are
eventually appropriate in this matter, this procedure is necessary.

                                       III. CONCLUSION

        In sum, because we conclude that a genuine issue of material fact exists as to whether the
option to purchase was specifically assigned and as to whether the reference to “the Real
Property” in § 30 of the lease refers to the land or the land and the restaurant, summary
disposition pursuant to MCR 2.116(C)(10) was improper. We therefore reverse the trial court’s
November 20, 2014 final judgment awarding plaintiff $93,910.08 in damages and $139,394.34
in attorney fees and ordering defendant to convey the land at issue to plaintiff as well as its
September 19, 2014 order granting plaintiff summary disposition and remand this matter for
further proceedings.

        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.

                                                             /s/ Deborah A. Servitto
                                                             /s/ Henry William Saad
                                                             /s/ Colleen A. O’Brien

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