In the 2008 case of Int’l Transmission v. Pine View Estates Subdivision Ass’n, the Michigan Court of Appeals (click for PDF of case) was asked to determine whether an easement agreement from the late 1940’s and early 1950’s giving Detroit Edison, and assignee International Transmission Company, the right to “construct, operate, and maintain” electrical power lines, “including the necessary H-frames, towers, fixtures, wires and equipment”, allowed for an upgrade replacement of wooden H-frame poles with single steel poles over fifty years later.

The landowners opposed the expansion of the easement.  They argued that the original easement agreement didn’t grant the utility company the right to erect steel poles based on the fact that the technology didn’t even exist in the 1940’s and 1950’s.

The Court of Appeals determined that the language in the original easement agreement comprehended the replacement of wooden H-frames with steel poles, even if the technology didn’t exist at the time the agreement was executed. The Court found that the steel monopoles and high voltage wires constitute “necessary … towers … wires and equipment.”

The bottom line is that property owners should be very specific as to what rights they are granting in an easement agreement.  Otherwise, they may end up giving away more than they bargained for.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

However, the term “gross misconduct” is not specifically defined in COBRA or in regulations under COBRA. Therefore, employers should be very cautious about withholding COBRA benefits when an employee is terminated for misconduct.  Whether a terminated employee has engaged in “gross misconduct” is a determination for the Courts and will depend on the specific facts and circumstances of the situation.  Employers should be aware that there can be serious consequences for failing to comply with COBRA if an employee’s misconduct is not deemed “gross misconduct”.

There are certain offenses that clearly constitute gross misconduct, and have been deemed so by Courts.  Generally, it can be assumed that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.”

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

The Anti-Lockout Statute specifically states that “any tenant in possession of premises whose possessory interest has been unlawfully interfered with by the owner, lessor, licensor, or their agents shall be entitled to recover the amount of his actual damages or $200.00, whichever is greater, for each occurrence and, where possession has been lost, to recover possession.” (emphasis added).  This statute prohibits a landlord from attempting self-help eviction of a tenant, or eviction without legal process.

In Christie, plaintiff tenant filed a complaint alleging that defendant landlord unlawfully locked them out of the rental premises and also moved a large quantity of valuable equipment from the rental premises to storage, where it was subsequently damaged.  Defendants argued that the plaintiffs were behind in rent, the plaintiffs had abandoned the premises, and that plaintiffs had numerous opportunities to retrieve their personal property after it was moved.

At trial, the court gave the jury an instruction regarding the award of exemplary damages.  Specifically, the jury was instructed that “an award of exemplary damages is proper if it compensates a plaintiff for humiliation, sense of outrage, and indignity resulting from injustices maliciously, willfully, and wantonly inflicted by the defendant.”  After a jury found for plaintiffs and against defendants on plaintiffs’ claim for violation of the anti-lockout statute, MCL 600.2918, they awarded plaintiffs treble damages for the anti-lockout claim, or three times the actual damages amount.

Defendants appealed on this issue, arguing that a statutorily based cause of action will not allow for damages other than those specified in the statute.  Exemplary damages are not specifically provided for in the Anti-Lockout Statute.

Although Michigan Court of Appeals in Christie agreed with Defendants argument, it did not reverse the ruling.  The Court reasoned that, under Michigan law, recovery under the Anti-Lockout Statute may include damages for emotional distress, embarrassment, and humiliation, as part of actual damages.  Therefore, although a separate award for exemplary damages is not appropriate in a statutorily based action unless the statute in question specifically provides for such damage, damages for mental distress are allowable as part of a plaintiff’s actual damages. As a result, the Court allowed plaintiffs to recover the damages awarded as emotional distress damages under the Anti-Lockout Statute.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

]]> http://www.detroitbusinesslaw.com/2010/03/damages-under-the-anti-lockout-statute/feed/ 0 http://www.detroitbusinesslaw.com/2010/02/keeping-property-tax-values-capped-upon-the-death-of-a-joint-tenant/ http://www.detroitbusinesslaw.com/2010/02/keeping-property-tax-values-capped-upon-the-death-of-a-joint-tenant/#comments Wed, 10 Feb 2010 10:28:49 +0000 Editor http://www.detroitbusinesslaw.com/?p=806 Under Michigan law, a property’s taxable value is capped and may not increase by more than the rate of inflation until ownership of the property is transferred.

However, there are certain types of transfers of ownership that are exempt from this rule and will not cause an uncapping of the taxable value.  These no-transfer-of-ownership exemptions are listed in the General Property Tax Act, Section 211.27a(7).

One particular exemption that has been the subject of recent litigation in Michigan is set forth in Section 211.27a(7)(h). This exemption has to do with a transfer that creates or terminates a joint tenancy.  It has been widely assumed that the death of a joint tenant is considered a transfer that “uncaps” the taxable value of a property and is not exempt under Section 211.27a(7)(h).

However, in December 2009, the Michigan Court of Appeals reversed the decision of the the Michigan Tax Tribunal in the case of Klooster v City of Charlevoix, holding that the death of one joint tenant, even though it terminated the joint tenancy, was not a “conveyance” because there was no instrument that affected title.  In that case, husband and wife first acquired property, wife then quitclaimed to husband, husband then quitclaimed to himself and his son as joint tenants, and the husband/father subsequently died.  It is the death of the father as joint tenant that is the issue of the dispute.  The court disagreed with the City of Charlevoix and the Tax Tribunal’s contention that the death constituted a “transfer” under Michigan statutes.

Just this month, the Michigan Court of Appeals in Klevorn v. City of Boyne City, using Klooster as precedent and citing the similarity of the facts, held that the death of one joint tenant (mother) and the subsequent transfer the other joint tenant with rights of survivorship (son) was not a “conveyance”.  Therefore, the Court held that the property value upon transfer to the son should not have been uncapped and he was entitled to the no-transfer-of-ownership exemption in MCL 211.27a(7)(h).

The Klooster decision has been appealed to the Michigan Supreme Court.  In the meantime, there is precedent to argue that upon the death of a joint tenant, the remaining joint tenant with rights of survivorship is not subject to an uncapping of the property’s taxable value.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

In some circumstances, and often in the context of a loan, parties may enter into multiple agreements with one another. When there are multiple agreements between the same parties, one party may want to negotiate the inclusion of  “cross default” provisions in those agreements.  A cross default provision provides that a party’s default under one agreement triggers an automatic default of all of the other agreements between the parties. Banks or Lenders often include a cross default provision in their loan documents to protect their financial interests.  Once the cross default provision is invoked, the defaulting party is not likely to have many options for recourse.

In order to be effective, the cross default provision must be included in each of the agreements subject to the cross default. Eagle Ridge LLC v Albert Homes LLC, 2009 Mich App, LEXIS 2382 (November 17, 2009).  In the recent case of Eagle Ridge LLC v Albert Homes LLC, the Michigan Court of Appeals refused to enforce a cross default provision that was found in only one of two simultaneously signed agreements.

The Michigan Court of Appeals used basic contract principals to support its decision.  Quoting Randolph v Reisig, 272 Mich App 331 (2006), the Court found that “an unambiguous contractual provision is reflective of the parties’ intent as a matter of law, and if the language of the contract is unambiguous, we construe and enforce the contract as written.”  Therefore, because one of the agreements at issue did not contain a cross default provision, the Court concluded that the parties must not have intended that the agreement be subject to a cross default provision.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

Unlike general business entities, there are certain restrictions on Professional Entities.  Both Professional Corporations and Professional Limited Liability Companies are required to operate for the specific purpose of providing one or more professional services.

Generally, all shareholders of the Professional Corporation or members or managers of the Professional Limited Liability must be licensed persons in one or more of the professional services the Professional Entity renders. However, persons in certain professions must comply with additional requirements when structuring their professional entity.  For example, all of the members or shareholders of certain health and legal professional entities must hold the same professional license.

A shareholder or member that wants to transfer or sell his or her shares or membership interests cannot do so except to another licensed person who is eligible to be a member of the PC or PLC.

Another important aspect of the professional entity is that it provides protection to its shareholders and members from personal liability for the PLC or PC’s acts, debts or other obligations.  However, the professional shareholder or member may still be personally liable under common law for his or her negligence or malpractice, or the malpractice of others under the member or shareholder’s direct supervision and control.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

This rule is clear in the recent Michigan Court of Appeals case, Vanhellemont v Gleason, et al (Click here for a PDF of the unpublished decision). The Court in this case looked to the terms of the parties’ Purchase Agreement and the Dual Agency Agreement and held that the dual agent not only complied with her duties under the Dual Agency Agreement by simply completing the transaction, but she would have been in violation of her duties under the Dual Agency Agreement had she drafted either a buyer-oriented or a seller-oriented agreement.

Therefore, a buyer or a seller that agrees to a dual agency relationship with their real estate agent is also agreeing, unless stated otherwise in writing, to be responsible for understanding and approving the terms of the purchase and sale agreement that they sign.  The dual agent will only ensure that the transaction in completed according to the terms of the purchase and sale agreement.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

On January 9, 2009, the State Real Estate Transfer Tax Act (MCL 207.521, et seq.) was amended to impose the state real estate transfer tax (“SRETT”) on transfers of a “controlling interest” in an entity, if the entity has 90% or more of its value in real estate. “Controlling interest” is defined to include ownership of 80% of the stock of a corporation, or 80% of the membership interests of a limited liability company.

The amended Act includes the same exemptions as the original SRETT statute, but adds new exemptions for (i) transfers made to effectuate a dissolution of the corporation, limited liability company, partnership or trust, and (ii) transfers from an entity to another where the ownership remains the same.

The amendments do not apply to the county property transfer tax. Therefore, an entity purchase still does not trigger an obligation to pay the county transfer tax.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

Michigan recognizes two types of joint tenancies:  (a) the standard form, which can be unilaterally severed; and (b) a joint tenancy with express words of survivorship in the granting instrument which cannot be unilaterally severed.

The recent Michigan Supreme Court of Jackson v Estate of Green, involved a dispute between two joint tenants, one of whom sought to partition the properties held by both joint tenants.  While the matter was pending before the Court, the joint tenant seeking a partition suddenly died.

The Michigan Supreme Court ruled that the joint tenancy at issue was a “standard joint tenancy” because the deed granting them a joint tenancy did not include express language identifying the parties as having a “joint tenancy with full rights of survivorship”.  As a result, the Court held that the joint tenancy could be severed by one of the parties without the consent of the others.  However, the Court also ruled that the severance occurred only upon a Court’s Order.  Merely filing a Complaint in Court did not sever the joint tenancy.  Therefore, the decedent’s estate had no interest in the subject property upon the decedent’s death.  Instead, the Court ruled that the title to the subject property vested in the surviving joint tenant immediately upon the other joint tenant’s death.

This case not only explains at what point in time a partition action severs a joint tenancy, but highlights the importance of using express words of survivorship in the granting instrument if the parties intend to secure their rights of survivorship.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

Among other arguments, the Plaintiffs contended that the regulation violated the common-law right of an employer to discharge an employee at will and, therefore, was void.  However, the Michigan Supreme Court rejected the argument, citing the well established case, Suchodolski v Michigan Consolidated Gas Co., and holding that an employer is not free to discharge an employee at will when the reason for the discharge contravenes public policy. 412 Mich 692, 695 (1982).

Michigan is an “employment-at-will” state.  This means that private sector employers can hire and fire employees for any reason, unless that reason is illegal.  Likewise, employees can quit for any reason.  Exceptions to this rule include when an employment contract exists or when the reason for discharge is against public policy, as was the case in McNeil v Charlevoix County.

Michigan is not one of the thirty states that has adopted smoker’s rights laws.  Therefore, while most Michigan private sector employers may be permitted to hire or fire an employee based on their smoking habits, a regulation like the one highlighted in this recent Michigan Supreme Court decision provide employees who smoke certain rights even in the at-will employment setting under the public policy exception to the Michigan at-will employment doctrine.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm. Click here to view her professional resume.