Court Opinion

ID: 9890476
Source: CourtListenerOpinion
Date Created: 2023-10-13 05:08:14.660766+00
Date Added: 2024-06-11T13:26:18.489863
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

CADLEROCK JOINT VENTURE, LP,                                          UNPUBLISHED
                                                                      October 12, 2023
               Plaintiff-Appellant,

v                                                                     No. 363078
                                                                      Wayne Circuit Court
ATINA M. BUTERAKOUS, also known as ATINA                              LC No. 21-002537-CK
M. BEUGRAND,

               Defendant-Appellee.

Before: O’BRIEN, P.J., and SWARTZLE and GARRETT, JJ.

PER CURIAM.

       Plaintiff, Cadlerock Joint Venture, LP, appeals as of right the trial court’s opinion and order
denying plaintiff’s motion for summary disposition under MCR 2.116(C)(10) and granting
summary disposition in favor of defendant, Atina M. Buterakous, under MCR 2.116(I)(2). We
reverse and remand for further proceedings.

                                        I. BACKGROUND

        In April 2003, defendant and her then-husband signed a note (the Note) securing a $46,000
loan with an interest rate of 8.99% from Horizon National Bank (Horizon). The loan was secured
by a mortgage on the couple’s marital home. Under the terms of the Note, defendant and her then-
husband were required to make monthly payments beginning in May 2003. The Note also states
that “[i]f, on April 28, 2018, [the borrower] still owe[s] amounts under this note, [the borrower]
will pay all those amounts, in full, on that date.”

       According to defendant, she divorced her then-husband in 2004, no payment was made on
the Note after 2006, the home securing the Note was sold at a sheriff’s sale in 2007, and she was
unaware that there was any liability still owing on the Note following the sheriff’s sale until she
was served with this lawsuit in 2021.

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        According to plaintiff, at some point after 2003, Horizon assigned the Note to
“Homecomings Financial, LLC” (Homecomings),1 who in turn sold its interest in the Note to
plaintiff. However, Homecomings apparently did not have the original note, so it executed a “Lost
Note Affidavit” and “Assignment of Lost Note” to effectuate the sale. In the “Lost Note
Affidavit,” the affiant averred that the Note was sold to plaintiff in 2008 and that, while he was
unable to locate the original note, Homecomings had no record of any interest in the Note being
otherwise sold or assigned, and the “affidavit [was] made and [was] given for the purpose of
inducing the purchase of the above described note without requiring the delivery, surrender and
endorsement of the original of same.” The “Assignment of Lost Note” states that Homecomings
transferred the Note to plaintiff for “good and valuable consideration.”

        Plaintiff filed the complaint giving rise to this action on February 24, 2021. In its
complaint, plaintiff claimed that it was the rightful owner and holder of the Note (despite being
unable to locate the original note), and alleged that defendant had defaulted on the Note and
therefore owed plaintiff over $80,0002 based on the remaining principal plus interest.

       On May 10, 2021, defendant filed an answer in which she admitted entering into the Note,
admitted that the principal outstanding on the Note “at the time of default was $39,175,” and
admitted “failing to make all payments” on the Note, but denied that plaintiff was entitled to
judgment. On the same day, defendant filed a list of affirmative defenses, including that plaintiff’s
claim was barred by the statute of limitations, laches, discharge, satisfaction, and release.

       On October 27, 2021, plaintiff moved for summary disposition in relevant part under MCR
2.116(C) (10). Plaintiff argued that it was entitled to summary disposition under MCR
2.116(C)(10) because it was uncontested that defendant entered into the Note, that she defaulted
on the Note by failing to make the required payments, and that she was therefore liable for the
outstanding balance of the Note plus interest.

        In response, defendant first argued that, under the statute of limitations applicable to its
claim, plaintiff had six years from when defendant defaulted on the Note to bring its action.
According to defendant, she defaulted on the Note in 2006, so plaintiff’s claim brought in 2021
was untimely. Defendant alternatively argued that plaintiff was not entitled to the relief it sought
because plaintiff failed in its duty to mitigate damages. Defendant contended that, if plaintiff
acquired the Note in 2008 as it claimed, then it inexplicably allowed interest to accumulate on the
Note for 13 years before bringing this action. Defendant also contended that it was unclear whether
plaintiff’s predecessor received any proceeds from the 2007 sheriff’s sale of defendant’s home
securing the mortgage. According to defendant, these outstanding factual issues precluded
summary disposition. Defendant relatedly argued that plaintiff’s claim was barred by laches
because it was unjust for plaintiff to wait nearly 15 years before attempting to collect on the Note.

1
 While plaintiff never explicitly states that the note was assigned to Homecomings, in the relevant
documents, Homecomings is always referred to as “HOMECOMINGS FINANCIAL, LLC
ASSIGNEE OF HORIZON NATIONAL BANK, A NATIONALLY CHARTERED BANK.”
2
  In plaintiff’s complaint, it asserted that the total amount defendant owed was $87,904.63, but in
its motion for summary disposition, it claimed that defendant owed $82,835.69 and $92,835.69.

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Defendant concluded by asserting that, for all the same reasons argued in its brief, it was entitled
to summary disposition under MCR 2.116(I)(2).

        In response, plaintiff contended that its suit was timely because the Note was payable at a
definite time—April 28, 2018—and plaintiff commenced its suit within six years of that time.
Plaintiff acknowledged that it could have made a demand when defendant was originally in default
but argued that it was not required to do so under the terms of the Note. In response to defendant’s
argument that plaintiff failed to mitigate its damages, plaintiff argued that it could have waited
even longer to file suit, but chose to do so earlier, demonstrating that plaintiff mitigated damages.
Finally, in response to defendant’s laches argument, plaintiff argued that it timely brought its suit,
so equity should not bar its enforcement just because it would require defendant to pay the
obligation she agreed to assume.

       At the hearing on the parties’ motions, defendant stressed that summary disposition was
improper because the Note was lost so it was unknown whether the Note had been satisfied after
the sheriff’s sale of the home securing the Note. The parties otherwise repeated the arguments
they made in their briefs, and the trial court took the matter under advisement.

        The trial court eventually issued a written opinion on September 8, 2022. The trial court
held that plaintiff’s claim was barred by the statute of limitations, explaining in relevant part:

               In Michigan, the general statute of limitations on an obligation to pay a loan
       on a note is 6 years after the due dates pursuant to MCL 440.3118(1 ). If the lender
       accelerates the loan, it is 6 years after the accelerated due date. Plaintiff has no
       proof that it accelerated the loan or even made a demand for payment. In addition,
       under MCL 440.3318(2), “[i]f no demand for payment is made to the maker, an
       action to enforce the note is barred if neither principal nor interest on the note has
       been paid for a continuous period of 10 years.” Plaintiff has provided no evidence
       that it made a demand for payment. It provides only its bare assertion that it
       attempted to communicate with Defendant regarding payment. Defendant’s last
       payment was in 2006. Fifteen years elapsed since Defendant’s last payment. Thus,
       under MCL 440.3318(2), Plaintiffs action is barred. Although Plaintiff claims that
       the claim accrued when the Note matured in 2018 and its claim is timely, it provides
       no authority for such an assertion. It also claims there is no acceleration clause in
       the Note. However, section (C) of the Note provides that the lender “may”
       accelerate the loan.

The trial court declined to address defendant’s alternative arguments. In its conclusion, the trial
court sua sponte entered “an award of sanctions and attorney fees” to defendant. The trial court
entered an order granting summary disposition to defendant under MCR 2.116(I)(2) the same day.
This appeal followed.

                                  II. STANDARD OF REVIEW

       A grant or denial of summary disposition is reviewed de novo. McMaster v DTE Energy
Co, 509 Mich 423, 431; 984 NW2d 91 (2022). Plaintiff moved for summary disposition under
MCR 2.116(C)(10). Summary disposition under MCR 2.116(C)(10) is proper when “there is no

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genuine issue as to any material fact, and the moving party is entitled to judgment or partial
judgment as a matter of law.” “A genuine issue of material fact exists when the record, giving the
benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable
minds might differ.” Zaher v Miotke, 300 Mich App 132, 139-140; 832 NW2d 266 (2013). In
response to plaintiff’s motion for summary disposition, defendant asked for—and the trial court
granted—summary disposition in favor of defendant under MCR 2.116(I)(2). That rule provides,
“If it appears to the court that the opposing party, rather than the moving party, is entitled to
judgment, the court may render judgment in favor of the opposing party.” MCR 2.116(I)(2). To
the extent that the issues raised on appeal concern matters of statutory interpretation, they are
reviewed de novo. Putkamer v Transamerica Ins Corp of Am, 454 Mich 626, 631; 563 NW2d 683
(1997).

                                          III. ANALYSIS

        Plaintiff argues that the trial court erred when it concluded that plaintiff’s claim was barred
by the statute of limitations. We agree.3

        The trial court granted summary disposition to defendant because it concluded that
plaintiff’s claim was barred by the statute of limitations in MCL 440.3118. That statute provides
in relevant part:

              (1) Except as provided in subsection (5), an action to enforce the obligation
       of a party to pay a note payable at a definite time must be commenced within 6
       years after the due date or dates stated in the note or, if a due date is accelerated,
       within 6 years after the accelerated due date.

               (2) Except as provided in subsection (4) or (5), if demand for payment is
       made to the maker of a note payable on demand, an action to enforce the obligation
       of a party to pay the note must be commenced within 6 years after the demand. If
       no demand for payment is made to the maker, an action to enforce the note is barred

3
  While not raised by the parties, it is unclear whether plaintiff is able to enforce the Note in this
case. On the copy of the original note, Horizon is designated as the holder of the Note. Yet in the
assignment that plaintiff provided to establish its interest in the Note, Homecomings assigned its
(supposed) interest in the Note to plaintiff. While Homecomings identifies itself as Horizon’s
assignee, nothing in the record actually establishes that Horizon assigned its interest in the Note to
Homecomings. It is therefore not evident from the record that Homecomings had any interest in
the Note to assign plaintiff. And if plaintiff lacks interest in the Note, then it “lack[s] standing
because it [is] not the proper party to assert the breach-of-contract claim[]” against defendant.
Pontiac Police & Fire Retiree Prefunded Group Health & Ins Trust Bd of Trustees v Pontiac No
2, 309 Mich App 611, 623-624; 873 NW2d 783 (2015). Because the issue is not raised by the
parties, however, we decline to address it at this time, though the parties remain free to address the
issue on remand.

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       if neither principal nor interest on the note has been paid for a continuous period of
       10 years.

Based on the plain language of the statute, the first subsection applies to “a note payable at a
definite time,” while the second subsection applies to “a note payable on demand.”4 The terms
“payable on demand” and “payable at a definite” time are defined in MCL 440.3108, which
provides in relevant part:

               (1) A promise or order is “payable on demand” if it:

                (a) States that it is payable on demand or at sight, or otherwise indicates that
       it is payable at the will of the holder.

               (b) Does not state any time of payment.

               (2) A promise or order is “payable at a definite time” if it is payable on
       elapse of a definite period of time after sight or acceptance or at a fixed date or
       dates or at a time or times readily ascertainable at the time the promise or order is
       issued, subject to rights of:

               (a) Prepayment.

               (b) Acceleration.

               (c) Extension at the option of the holder.

              (d) Extension to a further definite time at the option of the maker or acceptor
       or automatically upon or after a specified act or event.

         Based on these definitions, the Note at issue in this case was “payable at a definite time,”
not “payable on demand.” The Note does not say anywhere that it is “payable on demand or at
sight,” nor does it otherwise indicate that “it is payable at the will of the holder.” MCL
440.3108(1). Rather, the Note states that it was to be paid in monthly installments, and “[i]f, on
April 28, 2018, [the borrower] still owe[s] amounts under this Note, [the borrower] will pay all
those amounts, in full, on that date.” This makes clear that the Note is payable “at a fixed
date . . . readily ascertainable at the time the” note was issued. MCL 440.3108(2). Accord Joseph
& Anita Russell Tr. by White v Russell, 338 Mich App 170, 185; 979 NW2d 672 (2021) (“We
conclude that the promissory note at issue is payable at a definite time. In light of the language in
the note requiring monthly payments of at least $500 commencing 30 days from the date of
execution of the note, with 3% interest per annum, the promissory note is payable at a time that is
readily ascertainable, MCL 440.3108(2).”). While the Note has an acceleration clause, MCL
440.3108(2)(b) specifically acknowledges that a note “payable at a definite time” may be subject

4
 While the second sentence in MCL 440.3118(2) does not state that it only applies to a note
payable on demand, this is the only logical interpretation of the subsection in context.

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to the right of acceleration. In other words, the fact that the Note has an acceleration clause does
not change the fact that the note is payable at a definite time.

        Because the Note is payable at a definite time under MCL 440.3108(2), the statute of
limitations applicable to this action to collect on the Note is MCL 440.3118(1), and the trial court
erred by concluding that MCL 440.3118(2) applied. Again, MCL 440.3118(1) states that “an
action to enforce the obligation of a party to pay a note payable at a definite time must be
commenced within 6 years after the due date or dates stated in the note or, if a due date is
accelerated, within 6 years after the accelerated due date.” MCL 440.3118(1). It is undisputed
that the due date for the Note in this case was never accelerated, so plaintiff had six years from the
Note’s due date—April 28, 2018—to commence this action. Plaintiff’s action filed on February
24, 2021, was within this six-year timeframe and was therefore timely. Accordingly, the trial court
erred by holding that plaintiff’s claim was barred by the statute of limitations in MCL 440.3118,
and correspondingly erred by sanctioning plaintiff.

        In arguing against this result, defendant first contends that plaintiff’s claim accrued when
defendant breached the terms of the Note. In reliance on this argument, defendant cites Jacobs v
Detroit Auto Inter-Ins Exch, 107 Mich App 424; 309 NW2d 627 (1981), and In re Estate of
Easterbrook, 114 Mich App 739; 319 NW2d 655 (1982). Both cases are irrelevant to the instant
case, however. The instant case concerns a negotiable instrument, and the statute of limitations
applicable to claims concerning negotiable instruments is found in MCL 440.3118. That statute
was not added until 1993 with the passage of 1993 PA 130. See Rahaim v Rahaim, unpublished
per curiam opinion of the Court of Appeals, issued November 27, 2001 (Docket No. 216664), pp
4-7 (discussing the addition of 1993 PA 130 and its effects). Both Jacobs and In re Estate of
Easterbrook predate the passage of 1993 PA 130, and thus dealt with the general statute of
limitations applicable to breach-of-contract actions, which is found in MCL 600.5807. See, e.g.,
Diversified Fin Sys, Inc v Schanhals, 203 Mich App 589, 591-592; 513 NW2d 210 (1994)
(applying MCL 600.5807 to negotiable instruments before the passage of 1993 PA 130). Based
on MCL 440.3118(1), it is clear that the accrual date for plaintiff’s cause of action in this case was
the Note’s due date—April 28, 2018—because plaintiff never accelerated the Note.

        Defendant also directs this Court’s attention to Smith v Dept of Treasury, 163 Mich App
179, 185; 414 NW2d 374 (1987), where this Court stated, “The accrual, for purposes of the statute
of limitation, commences to run when the payee, by his own act, and in spite of the debtor, can
make the demand payable.” Defendant seemingly cites this case for the proposition that plaintiff’s
claim accrued when it could first demand payment from defendant when she defaulted in 2006.
This portion of Smith is inapplicable to this case, however. Smith was discussing a negotiable
instrument that did not specify when payment was to be made, explaining, “When no time for
payment is specified, the law will presume a reasonable time.” Id. at 184. Smith elaborated,
however, that “a payee may not postpone enforcement of his claim indefinitely when the language
of a note contemplates that a demand be made.” Id. at 185. It was in this context that the quote
from Smith was made, explaining how to determine when the statute of limitations begins to run

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when a negotiable instrument does not specify when it is due but is payable on demand. Clearly,
the situation here is not analogous.5

       Plaintiff summarily asserts on appeal that, if this Court disagrees with the trial court’s
conclusion, then summary disposition in plaintiff’s favor is warranted. This is simply untrue.
Defendant raised a variety of other defenses in the trial court that the trial court declined to address.
Accordingly, remand is necessary to, at the very least, permit the trial court to address the
remainder of the parties’ arguments.

        Reversed and remanded for further proceedings. We do not retain jurisdiction.

                                                                /s/ Colleen A. O’Brien
                                                                /s/ Brock A. Swartzle
                                                                /s/ Kristina Robinson Garrett

5
  We acknowledge that that the trial court also reasoned, “In addition, under In re $55,33617
Surplus Funds, [319 Mich App 501; 902 NW2d 422 (2017)], Plaintiff’s rights were completely
extinguished because it never attempted to redeem the property during the redemption period.” It
therefore appears that the trial court concluded that plaintiff no longer had any interest in the Note
because it failed to exercise its redemption rights in 2007 when defendant’s house was sold at a
sheriff’s sale. It is true that “in Michigan, the foreclosure of a senior mortgage extinguishes the
lien of a junior mortgagee where the junior mortgagee does not exercise its right to redeem.” Id.
at 509. Plaintiff, however, is not attempting to collect from proceeds from the sheriff’s sale, nor
is plaintiff otherwise claiming any interest in or lien on the foreclosed-upon property. Rather,
plaintiff is attempting to collect from defendant individually, which plaintiff is permitted to do
under the terms of the Note.

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