Michigan law has different statutes of limitations for different causes of actions. For example, lawsuits for breach of contract have six-year limits, while lawsuits for personal injury cases must be brought within three years. Additionally, contracts for the sale of goods contain a four-year statute of limitations.

In a recent case, Fisher Sand and Gravel Co. v. Neal A. Sweebe, Inc., the Michigan Court of Appeals had to determine whether the six-year statute of limitations or the four-year statute of limitations applied to an open account for the sale goods. An open account is an account that is left open for ongoing debit and credit entries and that ahs a fluctuating balance until one party settles and closes the account, at which time there is only one liability. Generally, an open account is a contract separate from the underlying contract for goods or services.

In Fisher Sand and Gravel, the plaintiff filed its claim after four years of the breach of contract. The underlying contract was for the sale of goods. As a result, the Court of Appeals had to determine whether the four-year statute of limitations under the UCC or the six-year statute of limitations for contract actions applied. The plaintiff argued that the six-year statute of limitations applied because an open account is a separate and distinct contract than the underlying contract for the sale of goods.

The Court of Appeals rejected the plaintiff’s argument and held that the four-year statute of limitations applied, despite the open agreement being a separate contract. The court reasoned that the open account existed “solely to facilitate [the] sale of goods.” In other words, the open agreement was so closely related to the sale of goods, that the UCC applies. Additionally, the statutes setting the limitations periods must be read together. When there is a conflict between them, the more specific statute governs.  In this case, the UCC was the more specific statute and therefore it governed the transaction.

The Court of Appeals also noted that its ruling was consistent with court cases from other states and that the UCC’s purpose of promoting uniformity among states with respect to transactions in goods was met.

In Miller-Davis, the plaintiff, a general contractor, filed a breach of contract claim against the defendant, a subcontractor who was hired to rebuild the roof of a YMCA swimming pool. The Plaintiff alleged that the defendant’s work failed to conform to the contract’s specifications. The plaintiff did not file a tort claims against the subcontractor. The problems with the roof were so severe that the roof had to be replaced, which is how the problem was identified.

Because the lawsuit was filed over six years after the work had been performed, there was an argument as to whether the statute of limitations for breach of contract, or the statute of repose applied. The subcontractor argued that Michigan’s statute of repose protected it from actions “to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death arising out of the defective and unsafe condition of an improvement to real property. …” Under the statute of repose, all claims must be filed within six years after occupancy. The plaintiff argued that the statute of repose did not apply because the claims were for breach of contract, not claims in tort.

Even though both statutes have six-year limitation periods, there is a significant difference between the two. Under the statute of repose, a claim accrues at the time of “occupancy of the completed improvement, use or acceptance of the improvement.” However, the statute of limitations for a breach of contract claim begins to run at the time the claim accrues.

The Michigan Supreme Court ruled that the statute of limitations for breach of contract applied because the claim was not a tort claim. The court noted that MCL 600.5839 “does not apply to a claim against an engineer or contractor for a defect in an improvement when the nature and origin of the claim is the breach of a contract.” The court ruled that the statute of repose applied only to tort actions.

The Supreme Court ruled that the claim did not fall under the statute of repose because:

There was no allegation that the roof deck system caused any “injury to property” or “bodily injury or wrongful death.” Nor was there any allegation of a “defective and unsafe condition.” Rather, plaintiff claimed that, because defendant failed to build the roof to the agreed-upon specifications, plaintiff was forced to expend money repairing it.

This case is significant because it narrows the scope of Michigan’s statute of repose exclusively to tort actions.

The Employee Notice Rule is generally considered to be pro labor. The notice outlines the numerous rights under the National Labor Relations Act (NLRA). Among these rights are the right to organize, join, or form a union; strike or picket; as well as the right to complain directly to the employer. The notice also explains many of the restrictions placed on employers under the NLRA. For example, the notice states that it is illegal for employers to fire employees for threatening to close a workplace if a union is created, question employees about union support, or firing employees because they choose to join a union.

The NLRB agreed to postpone the implementation of the date at the request of a federal judge. The rule is currently the subject of litigation and the NLRB believes that postponing the effective date will help resolve the litigation.

In a recent opinion, the Sixth Circuit Court of Appeals (available at http://www.law.justia.com/cases/federal/appellate-courts/ca6/10-1498/11a0580n-06-2011-08-18.html) ruled that proceeds from a tax sale of property held as tenants by the entirety between a husband and wife should, presumptively, be split 50-50. Under a tenancy by the entirety, a husband and wife hold joint title with a right of survivorship. This form of ownership is only available to married couples and does not allow one spouse to sell or transfer the property without the other spouse’s consent.

In US v. Barczyk, the Internal Revenue Service sought foreclosure of a home owned by a married couple in tenancy by the entirety. The married couple filed individual tax returns under the status of “married filing separately,” and the husband owed over $500,000 in back taxes. The house was worth approximately $200,000 and litigation ensued between the wife and the United States to determine two issues. First, the court had to determine whether the federal government had the authority to sell the property when the Barczyk’s holding the property as tenants by the entirety. Second, if the United States could foreclose on the property, to what percentage of the property was Mrs. Barczyk entitled.

In reaching the first issue, the Sixth Circuit had to determine whether the peculiarities of the tenancy by entirety prevented attachment of a tax lien. After noting that federal tax liens attach to property held as tenants by the entirety, the court ruled, that the United States had the authority to foreclose on the property under IRC § 7403, despite Michigan law.

After determining that the federal government could foreclose on, and sell the property, the court then considered what percentage of the house the woman owned. The Sixth Circuit determined that there is a presumption that a husband and wife each have an equal ownership interest in property held as tenants by the entirety. Mrs. Barczyk argued that she had a greater interest in the property based on actuarial evidence. The court rejected this argument by noting that the Mr. and Mrs. Barczyk were only five years a part in age and that both were in comparable health. As a result, Mrs. Barczyk was entitled to half of the proceeds acquired after the foreclosure sale of the property.

Although a significant property right is undercut by this ruling, it should be noted that the scope of the ruling is quite narrow. The ruling applies only to the federal government. Michigan law still protects property held jointly by husband and wife against creditors other than the federal government.

The Internal Revenue Service has recently announced that it will grant partial amnesty to employers who have classified workers as independent contractors when they are really employees (available at http://www.irs.gov/newsroom/article/0,,id=246203,00.html). The amnesty would be limited in scope.

Under this limited amnesty, employers who reclassify independent contractors as employees will pay only a portion of the employment taxes they would otherwise have paid for the year. Additionally, the IRS will waive any interest and penalties. The IRS has also stated that it will not audit participating employers for past years.

Despite this apparent show of good will, it is important to note that the IRS has stated that is may share the information with state and other federal agencies. As a result, it is important that those who may take up the IRS’s amnesty offer consult with an attorney so that they understand their rights, obligations, and potential liabilities.

Although the new law is easier for employers to comply with, it may end up reducing the total number of hours a minor may work. For example, if school was in session for only two days in a particular week (at 7 hours per day), the minor would still only be able to work 24 hours. Under the old law, the student would have been able to work 34 total hours during that week.

Although the rest of the law remains the same, it is important for employers to remember that a minor may not work before 6:00am, even on the weekends. This point is especially important for employers in service and hospitality businesses (such as restaurants and golf courses) whose employees’ shifts often start before 6:00 am.

The Supreme Court decided the case on Application for Leave to Appeal. Rather than grant leave to appeal, the Court instead ordered that oral argument be held upon the application for leave to appeal, and reversed the Court of Appeals.

The Supreme Court essentially adopted the dissenting opinion from the Court of Appeals, ruling that although MERS did not own the mortgage note itself, MERS was “recordholder of the mortgage,” which was a sufficient “interest in the indebtedness” to satisfy the statutory requirement that the foreclosing entity be an “owner of an interest in the indebtedness.”  Essentially, the Supreme Court determined that the Court of Appeals improperly interpreted the meaning of the language of the foreclosure by advertisement statute.

This Supreme Court Order appears to definitively resolve the issue of whether MERS can foreclose a mortgage by advertisement in MERS’ name, rather than the name of the owner of the note, in the State of Michigan.

Michael graduated from Michigan State University with a Bachelor of Arts in Political Science in 2006. Michael attended the University of Wisconsin Law School and graduated cum laude in 2011. Additionally, Michael was awarded a real estate certificate for completing the University of Wisconsin Law School’s Real Estate Curriculum Concentration.

Before joining the Demorest Law Firm, PLLC, Michael completed an internship with Justice Annette Zieger of the Wisconsin Supreme Court. In law school, Michael served as an Articles Editor for the Law Review.

The selection of “Super Lawyers” is based on a survey of thousands of fellow lawyers in the state of Michigan.  Michigan Super Lawyers identifies the top 5 percent of attorneys in the state, as chosen by their peers and through independent research.

Mark Demorest was named as a Super Lawyer for business law, and has been for every year since 2007.

Dave Nykanen has been selected as a Super Lawyer for real estate law again. He has been selected each year since 2008.

John Holmquist has been named a Super Lawyer for labor and employment law once again.  He has received this honor every year since 2006.

Melissa Demorest was named as a “Rising Star” in the area of business law for the second consecutive year.  This category is for lawyers who have been practicing less than ten years.  No more than 2.5% of the lawyers in a state may be named to the Rising Stars list.

Therefore, pursuant to Michigan statute enacting Proposal A of 1994, the 2012 taxable value for your property, absent a transfer of the property in 2011, will be equal to the lesser of:

(a) the 2012 State Equalized Value; or

(b) the 2011 Taxable Value, multiplied by 1.027.

For example, if your 2011 Taxable Value was $100,000, and your 2012 State Equalized Value is $105,000, your 2012 Taxable Value will be $102,700 ($100,000 multiplied by 1.027).

However, if your 2011 Taxable Value was 100,000, and your 2012 State Equalized Value is 100,000, your 2012 Taxable Value will be $100,000 (as your SEV is lower than $102,700).

If you have any questions about your 2012 taxable value calculation, or you believe your 2012 assessment is too high, please contact David Nykanen of the Demorest Law Firm.