Court Opinion

ID: 4566664
Source: CourtListenerOpinion
Date Created: 2020-09-18 09:06:18.700136+00
Date Added: 2024-06-11T12:48:50.696604
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

CITY OF GRAND RAPIDS,                                                   UNPUBLISHED
                                                                        September 17, 2020
                Plaintiff-Appellee,

v                                                                       No. 348479
                                                                        Kent Circuit Court
ARATH III, INC.,                                                        LC No. 14-009558-CH

                Defendant-Appellant,
and

CONSUMERS ENERGY COMPANY,

                Defendant.

Before: REDFORD, P.J., and BECKERING and M. J. KELLY, JJ.

PER CURIAM.

        Defendant, Arath III, Inc., appeals as of right the trial court’s order dismissing plaintiff’s
negligence claim, which came as a result of the trial court’s order denying Arath’s motion for
allocation of costs. For the reasons discussed below, we reverse.

                                          I. BASIC FACTS

        At issue in this case is the allocation of costs for the repair of a sidewalk and “areaway”
near the Keeler Building in Grand Rapids. Grand Rapids Code, title IV, ch 52, § 4.81(1) defines
an areaway as “an extended basement of a building within the street right-of-way.” Thus, as
relevant to this appeal, the sidewalk requiring repairs is above the areaway structure, which is also
in need of repairs. In a prior appeal, this Court affirmed the trial court’s determination that plaintiff
had to repair the sidewalk and Arath had to repair the areaway beneath the sidewalk. Grand Rapids
v Arath III, Inc, unpublished per curiam opinion of the Court of Appeals, issued June 26, 2018
(Docket No. 337920), p 4.

       However, while that appeal was pending, Arath entered into a contract in April 2018, with
the Downtown Development Authority of the City of Grand Rapids (DDA). The contract provided
that Arath had an obligation to repair the areaways pursuant to the trial court’s prior order and that

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Arath requested funding by way of a grant “to assist with the cost of repairs.” The contract further
stated that the DDA Board “approved funding for a portion of the cost of repairing the areaways
through its downtown enhancement grant program in accordance with the terms and conditions”
of the contract in question. Arath also had to file “[p]lans and specifications for bracing and
repairing the areaways,” with such plans and specifications to “include reconstruction of the
sidewalk.” If the bracing and repairing of the areaways—along with reconstruction of the
sidewalk—were completed by a certain date, then the DDA would bear 50% of the costs of
repairing and bracing the areaway not to exceed $200,000. The contract referred to the bracing
and repairs of the areaway along with reconstruction of the sidewalk collectively as “Repairs.”
The contract also included prerequisites inhibiting Arath’s receival of the grant. Relevant to this
appeal, ¶¶ 2D-2E states:

              D. Upon submission of a complete and timely request for reimbursement,
       and final inspection and approval by the City Building Official, the DDA shall
       reimburse Arath for 50% of the total cost of bracing and repairing the areaways, in
       an amount not to exceed the amounts provided in subsection 1.B. above.

               E. Arath shall be solely responsible for payment of all costs that exceed 50%
       of the total cost of bracing and repairing the areaways.

        Because the contract was entered into during the course of the previous appeal, the parties
stipulated to amend the trial court’s prior order to incorporate and authorize the contract. After
the contract was incorporated into the trial court’s previous order, the trial court held an evidentiary
hearing to determine allocation of costs. Ultimately, the court held that Arath was responsible for
costs associated with both the sidewalk and areaway because it interpreted the contract to mean
that, under ¶ 2E, Arath had assumed all liability. Accordingly, the trial court assessed no costs
against plaintiff.

                               II. CONTRACT INTERPRETATION

                                   A. STANDARD OF REVIEW

        Arath argues that the trial court erred in its interpretation of the contract because there was
never any intentional or voluntary assumption by Arath of plaintiff’s obligation to pay for the
sidewalk. We review de novo a trial court’s interpretation of a contract. Lueck v Lueck, 328 Mich
App 399, 404; 937 NW2d 729 (2019). “An unambiguous contract must be enforced according to
its terms.” Id. (quotation marks and citation omitted).

                                           B. ANALYSIS

        “A court’s primary obligation when interpreting a contract is to determine the intent of the
parties. The parties’ intent is discerned from the contractual language as a whole according to its
plain and ordinary meaning.” Bodnar v St John Providence, Inc, 327 Mich App 203, 220; 933
NW2d 363 (2019). (citation omitted). “[C]ourts must give effect to every word, phrase, and clause
in a contract and avoid an interpretation that would render any part of the contract surplusage or
nugatory.” Klapp v United Ins Group Agency, Inc, 468 Mich 459, 468; 663 NW2d 447 (2003).
“A court may not rewrite clear and unambiguous language under the guise of interpretation.”
Woodington v Shokoohi, 288 Mich App 352, 374; 792 NW2d 63 (2010).

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        Here, the trial court’s interpretation of the contract was contrary to the plain and ordinary
meaning of the contract’s terms. The contract provided that Arath was responsible for repairs to
the areaway, that Arath requested a grant from the DDA to assist in the repairs of the areaway, and
that the DDA would provide funding “for a portion of the cost of repairing the areaways.” The
contract also provided that the plans and specifications submitted by Arath must include plans and
specifications for reconstruction of the sidewalk. Importantly, the contract refers to both the
sidewalk and areaway repairs as “Repairs.” Throughout the contract, the word “Repairs” is used
when referring to reconstruction of both the sidewalk and areaway. Yet, no such reference was
made in the provision disputed by the parties, i.e., ¶ 2E.

        Instead, ¶ 2E states that “Arath shall be solely responsible for payment of all costs that
exceed 50% of the total cost of bracing and repairing the areaways.” Contrary to plaintiff’s
position that the use of the words “solely” and “all” means that Arath assumed liability for costs
of repairing the sidewalk, when read in context, the words “solely” and “all” merely limited the
DDA’s liability. Plaintiff was not a party to the contract. Therefore, use of the words “solely” and
“all” only applied as between Arath and the DDA, meaning that Arath was “solely” responsible
for “all” costs that exceeded $200,000 of the cost of repairing and bracing the areaway. Thus, the
use of those two words limited the DDA’s liability so as to make Arath responsible for any
remaining costs of bracing and repairing the areaway above $200,000, not to make Arath liable
for the costs in excess of $200,000 of repairing the areaway and sidewalk.

       Moreover, the contract’s reference to the plans and specifications “including reconstruction
of the sidewalk” and the DDA’s requirement to have the “Repairs” finished by a certain date
merely reflects that both the sidewalk and areaway needed to be repaired simultaneously. 1 Thus,
the contract reflected the reality that in order to receive the grant for bracing and repairing the
areaway, the sidewalk must also have been completed. This requirement does not mean that Arath
assumed liability for the costs of repairing the sidewalk.

        In sum, the contract did not alter the trial court’s previous order nor did it negate our
previous affirmance of the part of the trial court’s order rendering plaintiff liable for the sidewalk
and Arath liable for the areaway. The contract only required submission of plans and specifications
for repair of the sidewalk and areaway, which was required by the very nature of the repairs, and
in return, the DDA would provide a certain amount of money to Arath for its obligation to repair
the areaway. Nowhere in the contract does Arath expressly or impliedly assume liability for the
costs of repairing the sidewalk.

1
  The sidewalk and areaway were considered an “areaway sidewalk,” which means that it was “a
sidewalk constructed over an areaway.” Grand Rapids Code, title IV, ch 52, § 4.81(1). As recited
in the contract, “[t]he areaways extending from the basement of the Keeler Building into the public
right-of-way are in need of significant repair such that the sidewalks over the areaways have
collapsed.” Therefore, as asserted by Arath and undisputed by plaintiff, the repairs “had to be
performed simultaneously” and it was “not a project where Arath [could] perform its areaway
repairs and then leave the sidewalk repairs to the City to complete.”

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        Because the trial court erred in its interpretation of the contract, we reverse the court’s order
stating that Arath is responsible for the costs of repairing the sidewalk. In addition, because there
remains a dispute regarding the cost of replacing the sidewalk, we remand for further proceedings.

        Reversed and remanded. Arath may tax costs as the prevailing party. MCR 7.219(A). We
do not retain jurisdiction.

                                                                /s/ James Robert Redford
                                                                /s/ Jane M. Beckering
                                                                /s/ Michael J. Kelly

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