Court Opinion

ID: 4449085
Source: CourtListenerOpinion
Date Created: 2019-10-23 09:05:08.128201+00
Date Added: 2024-06-11T14:45:35.540544
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

In re LOUISE K. VAN SLOOTEN REVOCABLE
LIVING TRUST.

GARY J. DEVRIES, Trustee of the LOUISE K.                        UNPUBLISHED
VAN SLOOTEN REVOCABLE LIVING TRUST,                              October 22, 2019

              Plaintiff-Appellee,

v                                                                No. 345908
                                                                 Ottawa Probate Court
JDB PROPERTY DEVELOPMENT, LLC, and                               LC No. 17-063927-CZ
JERRY BRENNER,

              Defendants-Appellants.

In re MARION VAN SLOOTEN TRUST.

HUNTINGTON NATIONAL BANK, Trustee of
the MARION VAN SLOOTEN TRUST,

              Plaintiff-Appellee,

v                                                                No. 345909
                                                                 Ottawa Probate Court
JDB PROPERTY DEVELOPMENT, LLC, and                               LC No. 17-063928-CZ
JERRY BRENNER,

              Defendants-Appellants.

Before: MARKEY, P.J., and BORRELLO and BOONSTRA, JJ.

PER CURIAM.

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        In Docket No. 345908, defendants JDB Property Development, LLC, and Jerry Brenner
appeal by right the probate court’s order granting summary disposition in favor of plaintiff Gary
J. DeVries, trustee of the Louise K. Van Slooten Revocable Living Trust, on his contract claims
for the balance owing on a promissory note associated with the sale of real property. In Docket
No. 345909, JDB and Brenner appeal by right the probate court’s order granting summary
disposition in favor of plaintiff Huntington National Bank, trustee for the Marion Van Slooten
Trust, on its contract claims for the balance owing on a promissory note related to the sale of
adjacent real property. JDB was the promisor party with respect to the notes, and Brenner
personally guaranteed JDB’s payment on the notes. These cases concern the issue as to whether
the governing six-year statute of limitations elapsed on the contract claims based on an accrual
date measured by the date that balloon or final payments were due under the promissory notes or
whether the causes of action accrued at a later date predicated on oral modification of the notes
that extended the time for payment, resulting in the claims’ falling within the period of
limitations. We hold that the oral modification of the promissory notes was valid and
enforceable and also effectively extended Brenner’s guarantee agreements. Consequently,
because the claims accrued when the notes and contracts, as modified, were breached, plaintiffs’
contract claims were timely filed. We affirm.

        These cases arise from the sale in 2003 of two adjacent parcels of land in Port Sheldon
Township. JDB was specifically created by Brenner and his brother Douglas for the purpose of
acquiring the properties, subdividing them, and then developing residential lots for sale. One of
the parcels was owned by the Marion Van Slooten Trust, and the other was owned by the Louise
K. Van Slooten Revocable Living Trust.1 Brenner, as agent for JDB, signed two promissory
notes—one for each parcel payable to the respective trusts. The promissory notes required
annual payments of principal and interest starting in March 2003 and ending in March 2010 with
balloon or final payments being made. Acting in an individual capacity, Brenner executed
personal guaranty agreements with respect to both notes. In 2004, the trusts discharged the
mortgages, although the notes remained outstanding.

       Brenner and Louise Van Slooten met in 2009 to discuss alternative payment options
because JDB was experiencing serious financial difficulties at the time. An agreement was
reached that annual interest-only payments would be made until all of the residential lots in the
development were sold. In Brenner’s deposition, he testified as follows:

               Q. What you just described of paying interest only until you got through
       the sale of all the lots, is that what the agreement was?

                           [objection raised to characterization of agreement]

              Q. Well, was there an agreement?

1
  Marion and Louise Van Slooten were married. Upon Marion’s death in 1998, Louise became
trustee of Marion’s trust. When Louise passed away in 2017, Huntington became the trustee of
Marion’s trust, but DeVries became trustee of Louise’s trust.

                                               -2-
               A. A verbal agreement, yes.

                Q. Yeah. Okay. And is that what the verbal agreement was, interest only
       until all the lots sold?

              A. Yes. Along with any assessments, taxes or any other thing that kept the
       property free and clear from liens.

Consistent with the oral agreement, JDB made annual interest-only payments through March of
2016. Louise died in February 2017, and JDB did not make the required March 2017 payments.
Payment was demanded from JDB and Brenner, but defendants failed to pay.

        The lawsuits were filed in September 2017, with each complaint alleging two counts of
breach of contract, one as to JDB and one in regard to Brenner, and two counts of unjust
enrichment, similarly divided. Brenner moved for summary disposition under MCR 2.116(C)(7)
and (10) in both cases, arguing that plaintiffs’ claims were time-barred by the six-year statute of
limitations in MCL 440.3118(1). Brenner maintained that full payment by JDB on the
promissory notes was due in March 2010, that JDB failed to make full payment, and that
plaintiffs did not file their civil actions until September 2017. Plaintiffs filed competing motions
for summary disposition pursuant to MCR 2.116(C)(10), contending that there was no genuine
issue of material fact that defendants had breached the modified promissory notes and guaranty
agreements. With respect to Brenner’s statute of limitations defense, plaintiffs responded that
the oral modification of the contracts and subsequent breaches thereof resulted in the accrual
dates being bumped from 2010 to 2017. The probate court denied Brenner’s motions for
summary disposition and granted plaintiffs’ motions, concluding that JDB breached the
promissory notes by failing to make the March 2017 payments, that Brenner failed to perform
under the guaranty agreements in March 2017 upon JDB’s breaches, and that the complaints
filed in September 2017 were well within the period of limitations. In two written opinions, the
court noted that the two trusts “and JDB orally agreed to modify the note[s] such that
henceforward, the payments thereon would consist of interest only.” DeVries was awarded
$246,678, covering the outstanding balance on the note, interest, taxable costs, and attorney fees.
Huntington was awarded $265,357, encompassing the balance owed on the second note, interest,
taxable costs, and attorney fees. Defendants appealed by right in both cases, and this Court
consolidated the appeals. In re Louise Van Slooten Revocable Living Trust; In re Marion Van
Slooten Trust, unpublished order of the Court of Appeals, entered October 24, 2018 (Docket
Nos. 345908 & 345909).

        This Court reviews de novo a trial court’s ruling on a motion for summary disposition,
Loweke v Ann Arbor Ceiling & Partition Co, LLC, 489 Mich. 157, 162; 809 NW2d 553 (2011),
and the legal questions as to whether a claim is barred by a period of limitations, Collins v
Comerica Bank, 468 Mich. 628, 631; 664 NW2d 713 (2003), and whether a modified contract
existed, see Kloian v Domino’s Pizza, LLC, 273 Mich. App. 449, 452; 733 NW2d 766 (2007). A
motion brought pursuant to MCR 2.116(C)(10) tests the factual sufficiency of a claim. El-Khalil
v Oakwood Healthcare, Inc, __ Mich __, __; __ NW2d __ (2019); slip op at 7. “When
considering such a motion, a trial court must consider all evidence submitted by the parties in
the light most favorable to the party opposing the motion.” Id. A court may only grant the
motion when “there is no genuine issue as to any material fact, and the moving party is entitled

                                                -3-
to judgment or partial judgment as a matter of law.” MCR 2.116(C)(10); see also El-Khalil, __
Mich at __; slip op at 7. “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.” West v Gen Motors Corp, 469 Mich. 177, 183; 665 NW2d
468 (2003). For purposes of MCR 2.116(C)(10), a trial court is not allowed to weigh the
evidence, assess credibility, or resolve factual disputes. Pioneer State Mut Ins Co v Dells, 301
Mich. App. 368, 377; 836 NW2d 257 (2013). “A court may only consider substantively
admissible evidence actually proffered relative to a motion for summary disposition under MCR
2.116(C)(10).” Id. “Like the trial court's inquiry, when an appellate court reviews a motion for
summary disposition, it makes all legitimate inferences in favor of the nonmoving party.”
Skinner v Square D Co, 445 Mich. 153, 162; 516 NW2d 475 (1994).

        MCR 2.116(C)(7) provides for summary dismissal of an action when it is barred by a
“statute of limitations.” With respect to motions for summary disposition brought pursuant to
MCR 2.116(C)(7), this Court in RDM Holdings, Ltd v Continental Plastics Co, 281 Mich. App.
678, 687; 762 NW2d 529 (2008), observed:

               Under MCR 2.116(C)(7) . . ., this Court must consider not only the
       pleadings, but also any affidavits, depositions, admissions, or other documentary
       evidence filed or submitted by the parties. The contents of the complaint must be
       accepted as true unless contradicted by the documentary evidence. This Court
       must consider the documentary evidence in a light most favorable to the
       nonmoving party. If there is no factual dispute, whether a plaintiff's claim is
       barred under a principle set forth in MCR 2.116(C)(7) is a question of law for the
       court to decide. If a factual dispute exists, however, summary disposition is not
       appropriate. [Citations omitted.]

        On appeal, the parties agree that a six-year period of limitations applies. A six-year
statute of limitations specifically regarding promissory notes is found in MCL 440.3118(1),
which provides 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 . . .
.” MCL 600.5807(9) provides that “[t]he period of limitations is 6 years for an action to recover
damages or money due for breach of contract . . . .” MCL 600.5807(9) governed the guaranty
agreements. See Diversified Fin Sys, Inc v Schanhals, 203 Mich. App. 589, 591-592; 513 NW2d
210 (1994) (applying six-year period of limitations in MCL 600.5807 to “guarantors of a
promissory note” and indicating that “[c]ontracts of guaranty are not negotiable instruments”).2
Additionally, there can be no dispute that JDB breached the promissory notes, whether as
originally executed or as modified in 2009.

2
  Defendants complain that the trial court did not cite MCL 440.3118(1) regarding promissory
notes and instead relied solely on MCL 600.5807. But the summary disposition motion was
brought solely by Brenner on the guaranty agreements, not JDB under the promissory notes.
Regardless, either way, a six-year statute of limitations applied.

                                                -4-
       In pertinent part, MCL 600.5827 provides that “the period of limitations runs from the
time the claim accrues . . . [and] the claim accrues at the time the wrong upon which the claim is
based was done regardless of the time when damage results.” “For a breach of contract action,
the limitations period generally begins to run on the date that the breach occurs.” Seyburn,
Kahn, Ginn, Bess, Deitch & Serlin, PC v Bakshi, 483 Mich. 345, 355; 771 NW2d 411 (2009).

        As noted by plaintiffs, defendants’ position in the probate court was that JDB could not
assert the statute of limitations as a defense because it had made a payment to the trusts after
expiration of the period of limitations.3 Indeed, it was solely Brenner who sought summary
disposition with respect to plaintiffs’ contract claims. JDB never argued that the contract claims
on the promissory notes were time-barred. Accordingly, to the extent that JDB argues that the
statute of limitations barred plaintiffs’ suits against JDB, its argument lacks merit because it is
contrary to the stance proffered in the probate court. “A party may not take a position in the trial
court and subsequently seek redress in an appellate court that is based on a position contrary to
that taken in the trial court.” Living Alternatives for the Developmentally Disabled, Inc v Dep’t
of Mental Health, 207 Mich. App. 482, 484; 525 NW2d 466 (1994).

        Nevertheless, the 2009 oral agreement between Louise Van Slooten and Brenner
constituted a valid and enforceable modification of the promissory notes. First, there was
language in each promissory note reflecting anticipation of possible future modifications,
including the language that the parties “expressly agree[] that this Note, or any payment on this
Note, may be extended from time to time . . . .”

       Furthermore, the personal guaranty agreements executed by Brenner also contemplated
extensions of and modifications to the promissory notes and which were to be honored by
guarantor Brenner as follows:

               No Impairment of Guaranty. The validity and enforceability of this
       Guaranty shall not be impaired or affected by any of the following with respect to
       all or part of the Indebtedness or any agreement relating thereto or with respect to
       any security for all or part of the Indebtedness: (i) any extension, modification,
       renewal, indulgence, or substitution; (ii) any failure or omission to enforce any
       right, power, or remedy; (iii) any waiver of any rate, power, or remedy or of any
       default; (iv) any release, surrender, compromise, settlement, subordination, or
       modification, with or without consideration; (v) the unenforceability or invalidity
       thereof; or (vi) any consent by Lender or any sale or transfer of any security; all

3
  “[A] partial payment restarts the running of the limitation period unless it is accompanied by a
declaration or circumstance that rebuts the implication that the debtor by partial payment admits
the full obligation.” Yeiter v Knights of St Casimir Aid Society, 461 Mich. 493, 497; 607 NW2d
68 (2000). “Part payment even after the bar of the statute of limitations is complete revives the
balance of the debt.” Id. at 497 n 6.

                                                -5-
       whether or not the undersigned shall have had notice or knowledge of any act,
       omission, or circumstance referred to in this Paragraph.[4]

       Although it did not elaborate, the probate court impliedly accepted the view that the
promissory notes had been modified by the oral agreement. There is no genuine issue of
material fact that Brenner and Louise Van Slooten agreed in 2009 to modify the notes’ payment
schedules—JDB would make interest-only payments until the rest of the subdivided lots were
sold. And, consistent with the modified agreements, JDB made annual interest-only payments
until March 2017.

         “[P]arties to a contract are free to mutually waive or modify their contract.” Quality
Prod & Concepts Co v Nagel Precision, Inc, 469 Mich. 362, 364; 666 NW2d 251 (2003). The
modification of the contracts was subject to MCL 566.1, which effectively requires a contractual
alteration to either be in writing or be supported by consideration:

               An agreement hereafter made to change or modify, or to discharge in
       whole or in part, any contract, obligation, or lease, or any mortgage or other
       security interest in personal or real property, shall not be invalid because of the
       absence of consideration: Provided, That the agreement changing, modifying, or
       discharging such contract, obligation, lease, mortgage or security interest shall not
       be valid or binding unless it shall be in writing and signed by the party against
       whom it is sought to enforce the change, modification, or discharge.

        Here, it is undisputed that the modification of the agreements was not in writing;
consequently, the modification had to be supported by consideration. See Scholz v Montgomery
Ward & Co, Inc, 437 Mich. 83, 90 n 7; 468 NW2d 845 (1991) (contract modification did not fail
for lack of consideration because it was in writing); Zurcher v Herveat, 238 Mich. App. 267, 299-
300; 605 NW2d 329 (1999) (modification of purchase agreement “had to be in writing or
supported by consideration in order to be enforceable”); Windorf v Ferris, 154 Mich. App. 201,
203; 397 NW2d 268 (1986) (alleged oral agreement regarding the payment of real estate taxes
was not legally enforceable because there was no written modification, nor consideration
given); Minor-Dietiker v Mary Jane Stores of Mich, Inc, 2 Mich. App. 585, 590; 141 NW2d 342
(1966) (consideration distinct from underlying contract can suffice to make an oral modification
of a lease enforceable). “To have consideration there must be a bargained-for exchange.” Gen
Motors Corp v Dep’t of Treasury, Revenue Div, 466 Mich. 231, 238; 644 NW2d 734
(2002). Consideration exists “if the promisee in return for a promise does anything legal which
he is not bound to do or refrains from doing anything which he has a right to do, whether there is
any actual loss or detriment to him or actual benefit to the promisor or not.” Stott v Stott, 258
Mich. 547, 552; 242 N.W. 747 (1932). “There must be a benefit on one side, or a detriment
suffered, or service done on the other.” Gen Motors Corp, 466 Mich. at 238-239 (quotation
marks omitted.) “Courts do not generally inquire into the sufficiency of consideration[.]” Id. at
239. “Under the preexisting duty rule, it is well settled that doing what one is legally bound to

4
 A contract of guaranty is to be construed like any other contract. Comerica Bank v Cohen, 291
Mich. App. 40, 46; 805 NW2d 544 (2010).

                                               -6-
do is not consideration for a new promise.” 46th Circuit Trial Court v Crawford Co, 476 Mich.
131, 158; 719 NW2d 553 (2006) (quotation marks omitted).

        We conclude that the modification of the promissory notes was supported by adequate
consideration. Plaintiffs promised to refrain from demanding full payment and pursuing
collection and litigation against JDB for a prospective 2010 default that was imminent, giving
JDB the benefit of more time to make full payment and to avoid default, collections, and a
money judgment. In exchange, JDB promised to make annual interest-only payments for as long
as it took to sell the lots. Defendants argue that JDB was already obligated to pay interest
pursuant to the original promissory notes; therefore, there was a preexisting duty with respect to
interest payments that could not be characterized as new “consideration.” The original notes
signed in 2003 promised plaintiffs a maximum of 6% interest with final payment due on March
5, 2010. Under the modified agreements, however, plaintiffs would have the opportunity to
collect additional interest, potentially for an extended period of time. Accordingly, we conclude
that there was sufficient consideration to support the modification of the promissory notes. And
therefore, despite the absence of a writing, the modification was valid and enforceable.
Moreover, with the modification and extension of the promissory notes came an equivalent
modification and extension of the personal guaranty agreements, as contemplated by the express
language in the two guaranty contracts and supported by law. See Diversified Fin, 203 Mich
App at 592 (“We also find acceleration of the note triggered the running of the period of
limitation with regard to the guaranty contracts.”).

         Defendants argue that MCL 440.3118(1) required the complaints to be filed within six
years after the “due date or dates stated in the note,” which here was 2010. This argument lacks
merit because it fails to recognize the valid 2009 oral modification of the promissory notes.
Under defendants’ proffered theory, the due date in an original promissory note would always
govern the accrual of a cause of action regardless of any undisputed modifications of the note as
to its due date. This proposition lacks legal support.

        Defendants next devote a great deal of time to the argument that the oral modification
was too indefinite to be enforceable and that the trial court failed to explain or articulate the
terms of the modification. The terms of the oral modification called for annual interest-only
payments until all of the residential lots were sold. The necessary corollary or implication is that
full payment on the promissory notes would be due when all of the lots were sold. Other than
these changes, the language in the original notes remained applicable. The oral modification was
sufficiently definite to address the dire economic circumstances confronting defendants in 2009.
We cannot emphasize enough that defendants acted in conformity with the oral modification for
several years.

      Additionally, defendants, citing in part MCL 600.5825,5 argue that JDB’s partial
payments and conduct after the statute of limitations expired in 2016, as measured from 2010,

5
    MCL 600.5825 provides:
                (1) In actions commenced against 2 or more joint obligators, or joint
         executors or administrators of any contractor, if it is shown that the plaintiff's

                                                -7-
did not revive Brenner’s guaranty agreements or toll the statute of limitations as to Brenner.
Given our conclusion that there was a valid modification of the notes, thereby altering the
accrual date for the contract actions, we need not address whether JDB’s conduct or payments in
2016 revived the debts for purposes of examining the statute of limitations. Furthermore, to the
extent that defendants are arguing under MCL 600.5825 that the oral modification solely bound
JDB and not Brenner, we find the argument lacks merit. First, Brenner reached the oral
agreement with Louise Van Slooten without any indication that he was doing so solely as an
agent of JDB and not in an individual capacity. Moreover, as discussed above, the guaranty
contracts specifically provided that the validity and enforceability of the guaranty would not be
impaired by any extension or modification of the related underlying promissory notes. Reversal
is unwarranted.

       Finally, considering the foregoing, defendants’ additional argument that the oral
modification of the agreements was illusory also lacks merit. An illusory contract is an
agreement in which one party makes a promise as consideration that is so insubstantial as to
impose no obligation, with the insubstantial promise rendering the agreement unenforceable. Ile
v Foremost Ins Co, 293 Mich. App. 309, 315-316; 809 NW2d 617 (2011), rev’d on other grounds
493 Mich. 915 (2012). Given that there was sufficient consideration supporting the modified
contracts and that the modification did not suffer from indefiniteness, there was nothing illusory
about the modification.

        In sum, we conclude that the breaches of the modified contracts occurred in March 2017
when JDB failed to make its annual interest-only payments and Brenner ignored demands to
comply with the guaranty agreements. Thus, the causes of action accrued in March 2017, and
plaintiffs filed their complaints in September 2017, falling well within the six-year period of
limitations. Accordingly, we hold that plaintiffs’ contract claims were not time-barred and that

       action is barred by the period of limitations as to 1 or more of the defendants but
       that the plaintiff is entitled to recover against any of the other defendants because
       of a new acknowledgment, or promise, or for any other reason, then judgment
       shall be given in favor of the plaintiff against those defendants from whom he is
       otherwise entitled to recover and against the plaintiff as to those defendants in
       whose favor the period of limitations has run.

              (2) If there are 2 or more joint obligors or joint executors or joint
       administrators of any obligor, no one of them shall lose the benefit of the
       provisions of this chapter so as to be chargeable because of any acknowledgment
       or promise made or signed by any of the others.

              (3) If there are 2 or more joint obligors, or joint executors or joint
       administrators of any obligor, no one of them shall lose the benefit of the
       provisions of this chapter so as to be chargeable merely because of any payment
       made by any of the others.

                                                -8-
plaintiffs were entitled to summary disposition on those claims under MCR 2.116(C)(10). The
trial court did not err in its rulings.

     We affirm. Having fully prevailed on appeal, plaintiffs are awarded taxable costs under
MCR 7.219.

                                                        /s/ Jane E. Markey
                                                        /s/ Stephen L. Borrello
                                                        /s/ Mark T. Boonstra

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