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.

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.

In a recently decided case, Township of Blair v. Lamar OCI North Corp., (available at: http://milawyersweekly.com/fulltext-opinions/2011/11/01/township-of-blair-v-lamar-oci-north-corp-michigan-court-of-appeals-unpublished/)  the Michigan Court of Appeals discussed whether improvements may be made to a non-conforming use without destroying the protection from having to comply with the current regulations. In that case, a billboard violated the zoning laws in three ways. First, the billboard’s surface area was too large. Second, the billboard was too close to other billboards. Finally, the billboard was too tall. The owner of the billboard made changes to the height and surface area of the billboard, bringing them in conformity with the zoning laws. However, the billboard still violated the zoning regulation concerning distance between other billboards.  In other words, two of the three violations had been eliminated by the modifications.

After the modifications were made, the Township brought suit against the owners of the billboards to compel their removal. Even though the owner of the billboard fixed two of three non-conformities, the Court of Appeals ruled that the billboard still violated the current zoning regulations and ruled for the Township. Although this might seem unfair—after all, the billboard was in better conformity after the changes—it is important to note that the purpose of allowing non-conforming uses are for fairness. Once any changes have been made, it is expected that those changes will make bring the property into full compliance with applicable regulations.

Because of the quirks and intricacies of zoning laws, it is important for those who have been granted variances for non-conforming uses to seek legal advice prior to making improvements or changes to their property. Without help, those with non-conforming use variances might end up unintentionally losing those rights.

In Price v. High Pointe Oil Company (available at: http://coa.courts.mi.gov/documents/OPINIONS/FINAL/COA/20110825_C298460_35_298460.OPIN.PDF) the plaintiff homeowner sued the defendant oil company after her home was flooded with oil. The plaintiff had previously used the defendant to fill up her oil-burning furnace. After some time, the plaintiff purchased a new, non oil-burning furnace and discontinued purchasing oil from the defendant. After purchasing the new furnace, the plaintiff sold her old furnace and the oil tank to a third party. After a clerical error, the oil company set up an oil delivery. The oil company began to pump oil into the line that used to be connected to the oil tank. Because the oil tank was no longer in place the oil pumped directly in the plaintiff’s basement. In all, just under 400 gallons of oil were pumped into the basement.

As a result of the oil company’s negligence, the plaintiff’s home had to be demolished and the plaintiff lost a number of personal items. In addition to economic damages the defendant was depressed over the loss of her home. She felt great shame, embarrassment and humiliation in moving into her parents’ house. The plaintiff was awarded $100,000 in non-economic damages and the defendants challenged the award.

In Price, the Michigan Court of appeals ruled that non-economic plaintiffs may seek non-economic damages in negligence actions for the destruction of real property. The court’s decision turned on the historical and theoretical differences between personal property and real property. One of the most important distinctions between real property and personal property (generally) is that the former is completely unique. No piece of land is exactly the same. While Michigan courts have refused to allow non-economic damages for the destruction personal property (like a dog, car, or bicycle), the court failed to extend those prior holdings to real property.

In addition to each parcel of land’s unique characteristics, the court noted that homes have a unique value “which often provides as much if not more feelings of emotion and memories as it does shelter.” Moreover, the court noted that property allows special remedies for the breach of contracts for the sale of land such as specific performance.

This case is just one of many that highlights the special importance that land plays in our society. The implications of this case remain unclear, although it could often be cited for the enduring proposition that real property, above all else, holds a special place under the law.

In Premer, the Michigan Court of Appeals confirmed how to properly state a claim for unjust enrichment. In order to state a claim for unjust enrichment the party making the claim must make two showings: First, the claiming party must show that the other party received some benefit; Second, there must be an inequity. In showing that a benefit was conferred, the Premer Court considered a number of factors, but reaffirmed that the key factor in these cases is that unjust enrichment must be determined by the benefit conferred on the defendant, such as the increase in value provided by the work.

For example, in Premer, the plaintiffs sued under a theory of unjust enrichment. The plaintiffs argued that they should be compensated based on value of the services they provided in improving the land. The court rejected this argument and stated that unjust enrichment is determined based on the value added to the land based on the work completed. Additionally the court noted that additions in value to the land needed to be offset by the costs incurred by the defendant in foreclosing on the land. As a result, the plaintiff’s claims for unjust enrichment failed.

Despite the often-complicated world of contract law, it is important to remember that this area seeks to reach fair and equitable results. As a result, contract law often provides remedies where those unfamiliar with the topic might not realize. Unjust enrichment is one these doctrines that seeks to reach fair results.

For those not familiar the intricacies of the legal world, legal jargon may seem like a foreign language (and in some cases it is). One of the more difficult subject areas of law is contract law. Contract law, at its essence, seeks to protect the expectations of the parties to the contract and to reach fair results.

Even where no contract exists between parties, the law has developed doctrines meant to provide for fair and equitable results. One such doctrine, called unjust enrichment, seeks to protect the party that conferred a benefit upon another party. Unjust enrichment is a substitute for damages. It may apply where either no contract between the parties existed, or where the benefit conferred was outside the scope of any contract that did exist between the parties. Unjust enrichment is unavailable when there is an express contract between the parties, because damages are available under the express contract, and the court is not supposed to re-write the deal that the parties themselves have negotiated.

In a recent case, Hosford Bros. Concrete, Inc. v. Premer (available at www.michbar.org/opinions/appeals/2011/072611/49429.pdf), the Michigan Court of Appeals discussed the principle that unjust enrichment is not available where an express contract exists. The parties had two express contracts for the lending of money to purchase land and the land contract entered into as a result of the loan. The plaintiff in Premer sought payment for unjust enrichment following work they completed in developing a subdivision. Due to the real estate market collapse, they were unable to fully develop the land and the land was foreclosed on by the defendants. The plaintiffs sought payment for the improvements they made to the land.

The court noted that although there were two express agreements in the case, an unjust enrichment claim was still actionable because the improvements to the land were outside the scope of the two express land sale contracts. Next, how the defendant was unjustly enriched by the improvements to the land needed to be determined and calculated.

In Michigan, a mortgage can be foreclosed either judicially, or by advertisement (which does not require a court filing).  Mortgages secured by residential properties are almost universally foreclosed by advertisement, given that it is a quicker, less expensive option.  In Residential Funding Co, LLC v Saurman, a divided panel of the Michigan Court of Appeals ruled that MERS did not qualify to foreclose a mortgage by advertisement.

To qualify under the applicable Michigan statute, MERS would have to be either: (a) the owner of the indebtedness; (b) the owner of an interest in the indebtedness; or (b) the servicing agent of the mortgage.  It was undisputed that MERS was not the owner of the indebtedness or the servicing agent.  MERS argued it had an interest in the indebtedness, because its interest was derivative to the existence of the note.  The Court of Appeals disagreed with that argument, and ruled that MERS did not satisfy any of the three qualifiers.

Given the significance of this issue to residential lenders in the State of Michigan, and the existence of a dissenting opinion in the Court of Appeals, one should expect an application for leave to appeal to the Michigan Supreme Court.

In Michigan Properties, LLC v Meridian Township, the Michigan Court of Appeals ruled that Meridian Township was barred from retroactively uncapping the taxable value of a parcel in 2007 for a transfer alleged to have occurred in 2004, when the Township had failed to uncap the taxable value in 2005 and 2006. The court ruled that, unlike the circumstance that exists when one fails to file a Property Transfer Affidavit, a community is barred from retroactively uncapping the taxable value when a Property Transfer Affidavit is filed.

The court left open the possibility that the March 2005 Board of Review may have had authority to correct the tax roll and uncap the taxable value, had the assessor failed to do so after the 2004 transfer.  However, once the March Board of Review is closed, the community loses the ability to uncap the taxable value for a transfer occurring in the prior calendar year, so long as a Property Transfer Affidavit was filed.  Thus, reason No. 101 why you should file a property transfer affidavit, even if you are claiming an exemption from uncapping.

If you have questions about an assessor’s attempt to retroactively uncap your taxable value, or you wish to discuss structuring a transaction to minimize its property tax impact, please contact David Nykanen at Demorest Law Firm.

In the recent case of Edwards v Cape to Cairo, LLC, the Court of Appeals decided that the key is not who entered into the transaction, but rather the true nature of the transaction.  In the Edwards case, the plaintiff was planning a trip for himself and several members of his church to Africa.  The trip was going to involve both leisure activities and charitable mission work. The plaintiff paid the deposits for the trip through his corporation, and used also the staff of his corporation to make arrangements for the trip.  The defendant argued that the case should be dismissed because it had dealt with a corporation.  The Court of Appeals disagreed, ruling that the true purpose of the planned trip to Africa was personal in nature.  The trip had nothing to do with the business of the plaintiff’s corporation.  Furthermore, the plaintiff’s corporation was reimbursed for the deposits.  The Court of Appeals ruled that the corporation’s role in planning the trip “was done merely for convenience, not for any purpose related to [the corporation], which is an automotive supplier with no ties to Africa. … [T]he trip was planned for members of plaintiff’s family and church, not employees of [the corporation].”

Click here to download a PDF copy of the Court of Appeals Opinion in Edwards v Cape to Cairo, LLC.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

Click here to download a PDF of the Court of Appeals decision in Mossing v Demlow.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.