Court Opinion

ID: 4102363
Source: CourtListenerOpinion
Date Created: 2016-11-24 08:08:01.031599+00
Date Added: 2024-06-11T14:23:00.518193
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

JOELLE 98 LLC and JOEL CARS EXHIBITION,                           UNPUBLISHED
INC,                                                              November 22, 2016

              Plaintiffs-Appellees,

v                                                                 No. 328339
                                                                  Wayne Circuit Court
STONE CENTRAL LLC and NAJIB ATISHA,                               LC No. 13-014109-CK

              Defendants-Appellants,

and

WAYNE COUNTY TREASURER AND S & S
PROPERTY DEVELOPMENT, INC.

              Defendants.

Before: M. J. KELLY, P.J., and MURRAY and BORRELLO, JJ.

PER CURIAM.

       Defendants Stone Central, LLC, and Najib Atisha appeal by right a circuit court
judgment entered in favor of plaintiff Joel Cars Exhibition, Inc, (Joel Cars), in the amount of
$16,778.96.1 For the reasons set forth in this opinion, we affirm.

                                          I. FACTS

       In 2009, Hussein Hodroj immigrated to Detroit from Lebanon. Hodroj had family in
Detroit and he decided to set up a company called Joel Cars to export automobiles. Hodroj
purchased industrial property in Detroit to house the business. Hodroj formed Joelle 98, LLC,

1
 In their brief on appeal, plaintiffs-appellees incorrectly refer to themselves as
“defendants/appellee’s” and in the title block as “plaintiff/appellant.” In addition, appellees’
brief does not conform with the Michigan Court Rules’ formatting requirements regarding
double-spacing. See MCR 7.212(B). Nevertheless, despite these errors, we have taken the
arguments in the brief into consideration in resolving this appeal.

                                              -1-
(Joelle) to own the property, which consisted of an industrial building. Joel Cars was located
inside the industrial building owned by Joelle.

       This dispute arises from the land contract that Joelle signed with defendant Stone Central,
LLC, to purchase the industrial property. Stone Central is a limited liability company controlled
by defendant Najib Atisha, its sole principle. On July 24, 2009, Joelle entered into the land
contract with defendant Stone Central for the purchase of the property. Under the terms of the
land contract, Joelle was to make 48 monthly installment payments of $2,097.37 with a down-
payment of $50,000. At trial, both Hodroj and Atisha agreed that the land contract erroneously
required Joelle to make 48 monthly payments when Joelle should have only been required to
make 36 payments. The land contract did not reference property taxes.

        Hodroj made the monthly installment payments through Joel Cars’ bank account. While
Hodroj was making monthly payments, the property taxes went unpaid. In December 2012, the
Wayne County Treasurer sent a Notice of Show Cause and Judicial Foreclosure Hearing to Joelle
indicating that there was an $8,326.24 tax delinquency on the property and notifying Joelle that a
show cause hearing was scheduled for January 31, 2013. Joelle entered into a payment
agreement with the Wayne County Treasurer; however, the Treasurer eventually commenced
judicial foreclosure proceedings and seized the property. According to defendants, Joelle was
able to reacquire the property from the Treasurer.

        On October 29, 2013, Joelle commenced this suit against Stone Central, Atisha, the
Wayne County Treasurer, the City of Detroit and S & S Property Development, LLC. Apart
from Stone Central and Atisha, the other defendants were eventually dismissed from the case and
they are not concerned with this appeal. With respect to Stone Central and Atisha, Joelle alleged
the following four claims: breach of contract, fraudulent misrepresentation, negligent
misrepresentation, and conversion. Joelle alleged that Stone Central and Atisha breached the
land contract by failing to pay the property taxes after representing that they would pay the taxes.
Joelle alleged that part of the installment payments included principle, interest, and property
taxes. Joelle alleged that Atisha received the tax notices via his “sister company 7067 Intervale,
LLC,” which had the same business address as Stone Central. Joelle alleged that neither Atisha
nor Stone Central ever notified him of the unpaid tax assessments and both Atisha and Stone
Central refused to cure the tax delinquency. Joelle asserted that Atisha and Stone Central’s
conduct with respect to the unpaid taxes amounted to a breach of the land contract,
misrepresentation and conversion.

        On March 20, 2015, Atisha individually moved for summary disposition pursuant to
MCR 2.116(C)(8) and MCR 2.116(C)(10). Atisha alleged that he and Joelle were not in privity
of contract because Atisha was not a signatory to the land contract. Atisha argued that Stone
Central, his LLC, was a separate entity and there were no alleged facts to pierce the corporate
veil. Atisha argued that there was nothing to support that he committed a “substantial abuse,”
with Stone Central, or that he used Stone Central merely as an instrumentality to commit wrong
or fraud.

        Joelle replied, arguing that Atisha used Stone Central to defraud Joelle. Joelle argued
that the land contract was not properly amortized and that Joelle made payments that exceeded
its obligations under the land contract by 12 months. Joelle alleged that Atisha and Stone

                                                -2-
Central acknowledged the error, yet refused to refund the overpayment. Joelle argued that there
were sufficient allegations to pierce the corporate veil. Specifically, Joelle argued that Atisha
commingled funds and demanded that installment payments be made to Atisha individually and
to three other of Atisha’s corporate entities. Joelle attached an affidavit of Hodroj wherein
Hodroj averred that Atisha requested that the installment payments be made out to Atisha
personally, to Atisha Land Investment, LLC, to Stone Central, and to Intervale, LLC. Joelle also
alleged that Stone Central was merely an instrumentality that Atisha used to defraud Joelle in
that Atisha was Stone Central’s sole member and the subject property was Stone Central’s only
asset. Joelle argued that Stone Central disbursed all of the installment payments to Atisha and
Joelle was left with trying to figure out which entity or individual to attempt to recover from.
Joelle requested that the court deny Atisha’s motion and allow Joelle to amend its complaint.

       The trial court scheduled a motion hearing for April 17, 2015; however, the register of
actions indicates that the hearing was canceled and that the court denied Atisha’s motion for
summary disposition on April 17, 2015. Thereafter, Joelle filed an amended complaint on May
1, 2015. Joelle added allegations that Atisha directed Joelle to send payments to Atisha
personally and to multiple different entities controlled by Atisha. Joelle also more specifically
alleged that it “made payments over and above the payments required under the Land Contract”
and defendants kept the payments without refunding the overpayments.

        Following discovery and before trial, the trial court entered a final pretrial order. In the
order the parties stipulated that Joelle made 44 payments on the land contract and that
amortization was for 36 payments, and that Stone Central’s only asset was the property. Joelle
contested that it made 46 payments and that it was not refunded for any of the overpayment.
Stone Central and Atisha claimed that Joelle owed money despite the overpayments because all
of the payments were late. Joelle requested $20,973.70 for overpayments, $20,767.01 for unpaid
property taxes, $9,974 to repurchase the property, and $41,974.40 for treble damages for the
conversion claim for a total of $93,662.71 plus attorney fees.

        The trial court scheduled a bench trial for May 18, 2015. At trial, Hodroj testified that he
made 10 payments over the required 36 payments and that neither Stone Central nor Atisha
would refund the money. Hodroj explained that Atisha directed him to make the monthly
installment payments to Atisha Land Investments. Atisha never complained about the payments
and did not charge him a late fee even though some of his payments were late. Hodroj testified
that it was Atisha’s responsibility to pay the property taxes, but Atisha failed to do so. Hodroj
learned of the tax delinquency when he went to obtain a certificate of occupancy from the City of
Detroit. Hodroj made two tax payments so he could acquire the certificate. Hodroj testified that
he used Joel Cars to make the monthly installment payments to Atisha. Hodroj testified that he
owned both Joelle and Joel Cars and he was the sole member of both entities.

        Atisha testified that he owned three corporate entities: Stone Central, 7670 Intervale
(Intervale), and Atisha Land Investments (Atisha Land). Atisha agreed that Stone Central’s only
asset was the property that was conveyed to Hodroj under the terms of the land contract. Atisha
agree that the land contract should have specified that Hodroj was only required to make 36
monthly installment payments. Atisha explained that Hodroj was not entitled to a refund for any
additional payments because Hodroj had incurred late fees and interest. Atisha explained that he
was not responsible for the property taxes after Hodroj signed the land contract.

                                                -3-
        After cross-examining Atisha, Joelle moved for a directed verdict, arguing that the
evidence showed that Hodroj made extra payments and that there should be no offset for late fees
because Atisha never charged the late fees. Defense counsel responded that Joelle was not the
correct plaintiff because Joel Cars made the monthly installment payments, so defendant, not
plaintiff, was entitled to a directed verdict. Defendant argued that because the named plaintiff—
i.e. Joelle—did not make any of the overpayments Joelle was not entitled to any refund of the
overpayment.

       It appears that the trial court denied both motions for a directed verdict and agreed to
allow plaintiff to amend the complaint to add Joel Cars to the action. In addition, the court
dismissed the claims related to the unpaid property taxes and the misrepresentation claims. The
court did not articulate its ruling or rationale on the record, but after Atisha continued his
testimony, the court interrupted and indicated that it dismissed the claims involving unpaid taxes
and explained that the only issues remaining in the case were as follows:

       Yes, there is a number of payments that were overpaid. There is an issue about
       whether your client waived the late fee and interest. There’s an issue about
       piercing the corporate veil. And there’s an issue about conversion.

Defense counsel then proceeded to continue with his direct examination of Atisha.

      On direct, Atisha agreed that the monthly installment payments went directly to Atisha
Land because Stone Central did not have any assets and Stone Central owed money to Atisha
Land. Atisha agreed that Hodroj made eight overpayments, but testified that Hodroj owed him
$10,731.91 of late fees and interest. Atisha agreed that he did not discuss late fees with Hodroj.

       Following closing arguments, the court proceeded to make the following findings of fact:

       The land contract provided for 48 payments, monthly payments. This was in
       error and apparently a mutual mistake on both parties not realizing that in fact the
       land contract would be paid off in 36 months or 36 payments. The land contract
       also provided for interest penalty of two percent from 10 percent to 12 percent
       when Joelle 98, LLC was in default under the land contract, and a late fee if the
       payment of principal and interest was not made within 10 days of his due date.
       Joelle 98, LLC made 44 payments of $2,097.37.

       Pursuant to the instruction of Najib Atisha, most of the payments, if not all the
       payments were made to [Atisha Land]. Many of the payments made by Joelle 98,
       LLC were late. However, Mr. Atisha never charged a late fee or interest. In fact
       never had any discussion with Mr. Hodroj regarding this issue.

       After the payments were made, Mr. Hodroj notified Mr. Atisha that he had
       overpaid. Mr. Atisha asked to see some records. He indicated he was willing to
       sit down and discuss this issue but that never occurred. . . .

       In addition, it appears that most of the payments were not made by Joelle 98, LLC
       but rather by Joel Cars Exporter Expedition, LLC.

                                               -4-
       The court proceeded to find that there was a breach of contract, “because Stone Central
was permitted to collect more than what was required to be paid under the contract. Stone
Central never actually received the money because as I explained Mr. Atisha directed that the
payments be made to [Atisha Land].” The court also found that there was evidence to pierce the
corporate veil as follows:

       I find that Mr. Atisha is using his corporations interchangeably and not keeping
       them as separate entities depending on what he’s trying to do. There really is no
       reasonable explanation as to why if [Atisha Land] purchased [the property] why
       Stone Central, LLC would have it as its only asset.

       Nor is there any reasonable explanation that Stone Central, LLC’s only asset [the
       property] why would the payments be made to [Atisha Land]. He’s obviously
       treating these separate entity corporations as if they were one.

       Moreover, there’s a problem with doing that and this case is a good example of it.
       Because when you do something like that, when Stone Central, LLC should have
       received the excess funds that were paid by [Joel Cars], the money should be
       there to repay Joel [Cars]. However, the money’s not there because Mr. Atisha
       made this decision to comingle funds among his LLC’s.

       Accordingly, I find from both of those reasons that the corporate veil should be
       pierced, that Mr. Atisha should be responsible also on the breach of contract
       action.

        The court proceeded to find that Atisha received eight overpayments for a total amount of
$16,778.96 and that the overpayment should be refunded to Joel Cars. The court rejected
plaintiff’s conversion claim and reasoned that the overpayments amounted to a breach of
contract. The court then rejected defendants’ request to offset the overpayments with late fees
and interest because Atisha never informed Hodroj that he was expected to pay the late fees and
interest.

        After trial, on June 18, 2015, the trial court entered a written order adding Joel Cars as a
plaintiff and granting defendants’ motion to add set-off as an affirmative defense. On the same
day, the court entered a judgment awarding Joel Cars $16,778.96. This appeal ensued.

                                         II. ANALYSIS

       On appeal, defendants argue that the trial court erred in allowing plaintiff Joelle to amend
the complaint and add Joel Cars as a plaintiff.

       Leave to amend pleadings “shall be freely given when justice so requires.” MCR
2.118(A)(2). A motion to amend may be denied for several reasons including, but not limited to:

       (1) undue delay, (2) bad faith or dilatory motive on the part of the movant, (3)
       repeated failure to cure deficiencies by amendments previously allowed, (4)
       undue prejudice to the opposing party by virtue of allowance of the amendment,
       or (5) futility of the amendment. Absent bad faith or actual prejudice to the

                                                -5-
       opposing party, delay, alone, does not warrant denial of a motion to amend.
       [Diem v Sallie Mae Home Loans, Inc, 307 Mich. App. 204, 216; 859 NW2d 238
       (2014) (quotation marks and citations omitted).]

A circuit court’s decision on a motion to amend is reviewed for an abuse of discretion. Id. at
215-216. “An abuse of discretion occurs when the trial court chooses an outcome falling outside
a range of principled outcomes.” PCS4LESS, LLC v Stockton, 291 Mich. App. 672, 676-677; 806
NW2d 353 (2011).

        In this case, defendants cannot show that the trial court’s decision to add Joel Cars
amounted to an abuse of discretion. MCR 2.118(A)(2) allows amendment by leave of the court
and directs that “[l]eave shall be freely given when justice so requires.” In this instance, it
appears the trial court reasoned that justice required an amendment because Joel Cars was the
entity that made payments to defendants and it was undisputed that Joel Cars overpaid the
amount due on the land contract. Thus, it was not outside the range of reasonable and principled
outcomes for the trial court to conclude that justice required amending the pleading to add Joel
Cars into the suit to prevent defendants from obtaining a windfall and not having to refund the
overpayments. Moreover, defendants cannot show that they were prejudiced. In this case, both
Hodroj and Atisha used multiple LLCs and corporate entities in the course of their business
dealings. All of the entities were co-mingled. Joel Cars and Joelle were controlled by the same
individual, Hodroj, and had the same business address. In essence, for purposes of this case,
there was no real difference between Joel Cars and Joelle—they were both instrumentalities of
Hodroj. The only difference between the two entities appears to have been their bank accounts.

        Defendants argue that they were prejudiced because they did not have opportunity to
“take any discovery regarding this company,” or “review any documents kept by or establishing
[Joel Cars].” Initially we note that defendants were aware that Joel Cars made the payments.
Defendants received checks from Joel Cars and Joelle attached copies of the checks to its reply
to defendants’ motion for summary disposition. Thus, defendants could have requested
documents from Joel Cars had they deemed those documents necessary for their defense.
Moreover, defendants fail to articulate how additional discovery would have made any
difference in a trial where there was no dispute that Joelle, through Joel Cars, overpaid the
amount due on the land contract. The only disputed issue was whether defendants were entitled
to an offset and the trial court concluded that defendants were not because defendants did not
notify or attempt to enforce any late fees against Hodroj. Thus, no additional discovery would
have had any impact on the issues central to this case.

       Furthermore, even assuming arguendo that justice did not require allowing plaintiff Joelle
to amend the pleading, defendants would still have been liable to refund the overpayments. In
their motion for directed verdict, defendants argued that Joelle was not entitled to any refund of
the overpayments because Joel Cars made payments, not Joelle. However, this theory would not
have barred Joelle from recovering. It was undisputed that defendants received more than what
they were owed on the land contract. Specifically, there was no dispute that defendants received
eight extra payments on the land contract, payments which they were not entitled to. The only
issue was whether the overpayments would be offset by late fees and interest. Thus, irrespective

                                               -6-
of which corporate entity actually wrote the checks, the evidence was clear that the payments
were made on behalf of Joelle and that there was an overpayment. Joelle would have been
entitled to recover for the overpayments irrespective of whether Joel Cars was a plaintiff in the
proceeding. Accordingly, defendants cannot show that they were prejudiced when the trial court
granted plaintiff Joelle’s motion to amend the pleadings.

        Next, defendants argue that the trial court erred in piercing the corporate veil and holding
that Atisha was individually liable for the overpayments on the land contract.

        We review de novo a trial court’s decision whether to pierce the corporate veil “because
of the equitable nature of the remedy.” Foodland Distributors v Al-Naimi, 220 Mich. App. 453,
456; 559 NW2d 379 (1996). To the extent the trial court makes factual findings in support of its
decision, we review findings of fact for clear error. Teran v Rittley, 313 Mich. App. 197, 213; 882
NW2d 181 (2015).

        “Michigan courts typically consider corporations legally distinct from their shareholders,
even if a single shareholder owns all the stock.” Dep’t of Consumer Ind Serv v Shah, 236 Mich
App 381, 393; 600 NW2d 406 (1999). “However, when this fiction is invoked to subvert justice,
it may be ignored by the courts.” Foodland Distributors, 220 Mich. App. at 456. “There is no
single rule delineating when the corporate entity may be disregarded.” Id. (quotation marks and
citations omitted). “[T]he entire spectrum of relevant fact forms the background for such an
inquiry, and the facts are to be assessed in light of the corporation’s economic justification to
determine if the corporate form has been abused.” Id. (quotation marks and citations omitted).
This Court has previously articulated the proper standard for piercing the corporate veil: “First,
the corporate entity must be a mere instrumentality of another entity or individual. Second, the
corporate entity must be used to commit a fraud or wrong. Third, there must have been an unjust
loss or injury to the plaintiff.” SCD Chemical Distributors, Inc v Medley, 203 Mich. App. 374,
381; 512 NW2d 86 (1994) (citation omitted).

       In this case, the trial court did not err in finding grounds to pierce the corporate veil.
Here, evidence showed that Atisha had multiple corporate entities including Stone Central and he
used these entities as his instrumentalities. Id. Atisha co-mingled the assets of the entities and
had Hodroj make the installment payments to different entities including Atisha Land.
Furthermore, Atisha admitted that Stone Central’s only asset was the property and after the
property was conveyed to Joelle, Stone Central did not have any assets and the installment
payments were not directed to Stone Central. Indeed, after the land conveyance, it appears that
Stone Central existed only on paper. Stone Central did not have any assets and it was not
engaged in any business. Furthermore, in this proceeding, Atisha essentially sought to use Stone
Central’s corporate entity to avoid refunding the overpayments. Id. Specifically, there was no
dispute that Hodroj overpaid on the land contract and that Stone Central did not have any assets.
Thus, by arguing that Atisha should not be personally liable to refund the overpayments,
defendants essentially argue that Hodroj should be limited to recovering from Stone Central,
which would in turn bar Hodroj from recovering anything because Stone Central did not have
any assets. By failing to pierce the corporate veil, Hodroj’s entities would suffer an unjust loss
and injury in that they would be unable to recover anything from Stone Central.

                                                -7-
        In their appeal brief, defendants state “[m]ost egregious, [piercing the corporate veil] was
not even a claim in Appellee’s Complaint or Amended Complaint!!!” To the extent that this
sentence is an argument, defendants fail to cite any law or develop a coherent argument to
support that piercing the corporate veil must be plead as a separate and distinct cause of action.
It is not sufficient for a party “simply to announce a position or assert an error and then leave it
up to this Court to discover and rationalize the basis for his claims, or unravel and elaborate for
him his arguments, and then search for authority either to sustain or reject his position.”
Mitcham v Detroit, 355 Mich. 182, 203; 94 NW2d 388 (1959). Accordingly, we need not address
this argument and decline to do so.2

        In sum, having reviewed the facts and circumstances of this case, we conclude that the
trial court did not err in piercing the corporate veil and holding Atisha personally liable for the
breach of contract claim. Medley, 203 Mich. App. at 381.

        Affirmed. Having prevailed in full, appellees may tax costs. MCR 7.219(A). We do not
retain jurisdiction.

                                                              /s/ Michael J. Kelly
                                                              /s/ Stephen L. Borrello

2
  Even if we were to address defendants’ argument, there is no authority to support that piercing
the corporate veil must be pled as a separate and distinct cause of action. See e.g. In re RCS
Engineered Prods Co, 102 F 3d 223, 226 (CA 6, 1996) (noting that piercing the corporate veil
“is not by itself a cause of action,” but rather an equitable doctrine “which fastens liability to the
individual who uses a corporation merely as an instrumentality to conduct his or her own
personal business. . . .”) (quotation marks omitted).

                                                 -8-