Court Opinion

ID: 4034764
Source: CourtListenerOpinion
Date Created: 2016-09-19 07:11:01.442958+00
Date Added: 2024-06-11T12:48:31.638484
License: Public Domain

STATE OF MICHIGAN

                           COURT OF APPEALS

KEYBANK NATIONAL ASSOCIATION,                         UNPUBLISHED
                                                      September 15, 2016
             Plaintiff,

v                                                     No. 327469
                                                      Oakland Circuit Court
LAKE VILLA OXFORD ASSOCIATES, LLC,                    LC No. 2012-126588-CK
and KENNETH C. BURNHAM,

             Defendants-Appellees,

and

HOMESTEAD PROPERTIES, LP,

             Defendant-Appellant,

and

CHRISTOPHER INVESTMENT COMPANY,
INC., ROBB EVANS & ASSOCIATES,
OXFORD BANK CORP., MICHIGAN BELL
TELEPHONE CO., AT&T MICHIGAN,
CONSUMERS POWER CO., CONSUMERS
ENERGY CO., DETROIT EDISON CO., FANCH
CABLEVISION OF MICHIGAN, TW FRANCH
TWO CO., TW FRANCHTWO CO., CABLE
COMM, MCGLONE LEASING INVESTMENT
CO., MCGLONE LEASING INVESTMENT
COMPANY, INC., CC VIII OPERATING,
CHARTER COMMUNICATIONS, CHARTER
TOWNSHIP OF OXFORD, OAKLAND
COUNTY TREASURER, CAPITOL
INFRASTRUCTURE, CONNEXION
TECHNOLOGIES, and NEWBURY
MANAGEMENT SERVICES, LLC,

             Defendants.

Before: CAVANAGH, P.J., and SAAD and FORT HOOD, JJ.

                                          -1-
PER CURIAM.

        In this action for payment of a guaranty, defendant Homestead Properties, LP, appeals as
of right an order denying its motion for summary disposition which was followed by a jury trial
and a judgment in favor of defendants Lake Villa Oxford Associates, LLC, and Kenneth C.
Burnham. We reverse and remand for proceedings consistent with this opinion.

        This case was initiated by KeyBank National Association in response to Lake Villa
Oxford and Burnham’s failure to repay a loan for $30.05 million and mortgage regarding a 174-
acre parcel in Oxford (the subject property). In KeyBank’s action, numerous parties having an
interest in the subject property were named, including Homestead and Christopher Investment,
but only Homestead, Lake Villa Oxford, and Burnham remain parties to this action.

        Burnham acted as manager of several related companies, including Lake Villa Oxford
and Lake Villa Rochester. The subject property here was owned by Lake Villa Oxford but, as
stated above, KeyBank held a mortgage on the property which secured a $30.05 million loan.
That loan was also secured by a personal guaranty from Burnham. And when Christopher
Investment loaned Lake Villa Rochester $4.45 million, the loan was secured by a second
mortgage on the subject property and Burnham, again, personally guaranteed the loan.

        Shortly after that agreement with Lake Villa Rochester, Christopher Investment assigned
its rights under the loan, mortgage, and guaranty to Homestead. While this case progressed,
Homestead notified Lake Villa Rochester and Burnham that they were in default under the loan
and mortgage for failure to repay, and that it sought repayment by either Lake Villa Rochester
under the loan, or from Burnham under the guaranty. Burnham responded by arguing that the
guaranty was not assignable because it stated: “This Agreement shall be binding on and inure to
the benefit of the parties and their respective successors and permitted assigns.” Burnham
argued that the guaranty was only assignable to parties that he had permitted, and that no such
permission extended to Homestead. Homestead disagreed, arguing that the language did not
create an anti-assignment clause but, even if it did, the assignment was still effective with regard
to Homestead, and Burnham’s sole grievance was with Christopher Investment for breaching the
alleged anti-assignment clause.

        Homestead moved for summary disposition on those grounds and the trial court denied
the motion, holding that there was a question of fact for a jury regarding whether there was an
anti-assignment clause. The case proceeded to trial. Homestead’s witnesses testified that they
did not believe Burnham’s permission was required for assignment. Burnham testified that he
intended the guaranty to be personal to Christopher Investment and to be only assignable when
he permitted. And he did not permit Christopher Investment to assign the guaranty to
Homestead.

       The jury was then presented with a verdict form that did not include a question asking if
the language of the guaranty created an anti-assignment clause. Rather, the verdict form
contained the following question, to which Homestead objected: “IS HOMESTEAD AN
INTENDED ‘PERMITTED ASSIGNEE’ OF THE PERSONAL GUARANTY OF KEN
BURNHAM? ANSWER: _____ [YES OR NO].” The jury answered the question in the
negative, finding that Homestead was not an “intended permitted assignee” of Burnham’s

                                                -2-
personal guaranty and, thus, held that Homestead did not have a cause of action against Burnham
under the guaranty. The trial court later entered judgment on the jury verdict in favor of
Burnham and Lake Villa Oxford.

        Subsequently, Homestead moved for a judgment notwithstanding the verdict, arguing that
the assignability of Burnham’s guaranty was a purely legal issue that should not have been
submitted to the jury. Further, as a matter of law, an anti-assignment clause was not created by
the subject language—“permitted assigns”—but, even if it had been, Burnham’s claim was to be
asserted against Christopher Investment, not defensively against Homestead. Alternatively,
Homestead requested a new trial, arguing that the above-quoted jury verdict form question was
misleading because it included the word “intended,” which was not part of the contract. It also
assumed that an anti-assignment clause existed and that Burnham’s permission was required
instead of asking the jury whether an anti-assignment clause was created by the language of the
contract. The trial court denied Homestead’s motion and this appeal followed.

        Homestead argues that the trial court erred when it denied its motion for summary
disposition because an anti-assignment clause was not created by the language of the guaranty.
We agree.

        This Court reviews de novo a decision on a motion for summary disposition. Maiden v
Rozwood, 461 Mich. 109, 118; 597 NW2d 817 (1999). In evaluating a motion brought under
MCR 2.116(C)(10), the reviewing court must consider any affidavits, pleadings, depositions,
admissions, or other evidence submitted by the parties in the light most favorable to the party
opposing the motion. Id. at 120, citing MCR 2.116(G)(5). Summary disposition is proper where
there is no “genuine issue regarding any material fact.” Id. “Questions involving the proper
interpretation of a contract or the legal effect of a contractual clause are also reviewed de novo.”
McDonald v Farm Bureau Ins Co, 480 Mich. 191, 197; 747 NW2d 811 (2008).

        “That contracts are enforced according to their terms is a corollary of the parties’ liberty
to contract.” Coates v Bastian Bros, Inc, 276 Mich. App. 498, 503; 741 NW2d 539 (2007). The
goal of contract interpretation, therefore, “is to determine the intent of the contracting parties.”
Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich. 362, 375; 666 NW2d 251
(2003). “Accordingly, we examine the language in the contract, giving it its ordinary and plain
meaning if such would be apparent to a reader of the instrument.” Wilkie v Auto-Owners Ins Co,
469 Mich. 41, 47; 664 NW2d 776 (2003). In other words, this Court applies the plain meaning of
the language in a contract unless the language of the contract is ambiguous. Henderson v State
Farm Fire & Cas Co, 460 Mich. 348, 353; 596 NW2d 190 (1999). “‘A contract is said to be
ambiguous when its words may reasonably be understood in different ways.’” Vushaj v Farm
Bureau Gen Ins Co of Mich, 284 Mich. App. 513, 515; 773 NW2d 758 (2009), quoting Raska v
Farm Bureau Mut Ins Co of Mich, 412 Mich. 355, 362; 314 NW2d 440 (1982). “Courts may not
impose an ambiguity on clear contract language.” Coates, 276 Mich. App. at 503. “Whether a
contract is ambiguous is a question of law.” Id. at 504. “Only when contractual language is
ambiguous does its meaning become a question of fact.” Id.

        Here, the contract language at issue is the alleged anti-assignment clause found in the
guaranty. “Under general contract law, rights can be assigned unless the assignment is clearly
restricted.” Burkhardt v Bailey, 260 Mich. App. 636, 652; 680 NW2d 453 (2004), citing Calamari

                                                -3-
& Perillo, Contracts (3d ed), § 18-10, p 735. This Court has previously cited 3 Restatement
Contract, 2d, § 317(2), p 15, for the notion that contractual rights are assignable so long as the
assignment is not “validly precluded by contract.” Kingston v Markward & Karafilis, Inc, 134
Mich. App. 164, 171-172; 350 NW2d 842 (1984). Michigan courts “have striven to uphold
freedom of assignability.” Detroit Greyhound Employees Fed Cred Union v Aetna Life Ins Co,
381 Mich. 683, 689; 167 NW2d 274 (1969) (internal citations and quotation omitted). Indeed,
“those who would compose a contractual bar against alienation must use ‘the plainest words.’”
Id. (citations omitted).

        Burnham argues, as he did in the trial court, that the contractual language—“[t]his
Agreement shall be binding on and inure to the benefit of the parties and their respective
successors and permitted assigns”—is enough to upset the right of alienability supported by
Michigan law. We cannot agree. The clause at issue does not mention assignability and it
contains no negative language regarding assignment. Further, nowhere in the contract does it
state that assignment is prohibited absent consent and, moreover, the contract does not use
negative language to describe assignability. In other words, there is no language like, for
example, “this contract shall not be assigned” or “this contract is not assignable by Christopher
Investment without the prior written consent of Kenneth C. Burnham.” To the contrary, the
clause at issue speaks positively about the possibility of assignments. Consistent with the
general rule that contract rights are assignable, it states that the contract “shall be binding and
inure to the benefit of the parties and their respective successors and permitted assigns.” Plainly,
that language considers and approves of the possibility of assignment.

       In summary, considering the plain language of the contract, and the absence of strict
language in “the plainest words” barring assignment, we conclude that the guaranty was
assignable by law. See id.; see also Wilkie, 469 Mich. at 47. As such, the trial court erred when it
denied Homestead’s motion for summary disposition. That decision is reversed and this matter
is remanded to the trial court for determination of the amount of money owed under the
guaranty.

        Our resolution of this issue renders the remaining issues raised by Homestead in this
appeal irrelevant, and we decline to consider them.1

1
  We note, however, that the jury verdict form contained reversible error because it assumed the
issue the jury was required to answer. Instead of asking the jury to decide whether the language
of the guaranty created an anti-assignment clause that required Burnham’s permission, the jury
was essentially told that such permission was required for assignment and then asked if it had
been given. That question amounted to error affecting the outcome of the proceeding and would
require reversal. See Case v Consumers Power Co, 463 Mich. 1, 6; 615 NW2d 17 (2000).

                                                -4-
        Reversed and remanded for further proceedings consistent with this opinion. We do not
retain jurisdiction.

                                                         /s/ Mark J. Cavanagh
                                                         /s/ Henry William Saad
                                                         /s/ Karen M. Fort Hood

                                             -5-